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MNI expectations for FQ1 issuance ahead of DMO consultation: Linkers

GILTS
  • There are 5 remaining index-linked gilt auctions (1 already announced, 1 extra on 19 December announced today, 3 in FQ4) with GBP6.9bln still due to be raised (GBP18.0bln target). In addition there is now GBP3.0bln left for the final linker consultation of the year (total linker syndication GBP10.6bln).
  • Syndication: We don’t have a strong view on the linker syndication. In terms of new issues, we note that there is a gap in the linker curve for a new 3-year issue in the 2053/2054 area which may lead to demand for a new issue to be launched via syndication. There has also been very strong demand at the two 20-year 0.625% Mar-45 linker syndications held this fiscal year already (in April and July). The 50-year 0.125% Mar-73 linker is another possibility for syndication.
  • 0.75% Nov-33 linker: We look for 1 auction of the on-the-run 10-year linker that was launched via auction in June. (In addition to the 5 December auction).
  • 0.125% Mar-51 linker: Assuming that there is not a new 30-year gilt launched via syndication in the quarter, we look for 1-2 auctions of the 0.125% Mar-51 linker. However, we note that there is a gap in the linker curve in the 2053/2054 area which may lead to demand for a new issue to be launched via syndication.
  • Other linkers: We note that the DMO has not sold an issue with a longer maturity than the 0.125% Mar-51 at auction since September 2021. The two other linkers most likely to be chosen for auction in our view are the 15-year 0.125% Mar-39 linker or the 20-year 0.625% Mar-45 linker.
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