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MNI expectations for FQ1 issuance ahead of DMO consultation: Longs

GILTS
  • There are 6 remaining long auctions (1 already announced, 1 extra on 13 December announced today, 4 in FQ4) with GBP12.9bln still due to be raised (GBP30.5bln target). In addition there is now GBP3.9bln left for the final long-dated consultation of the year (total longs syndication GBP20.8bln)
  • Syndication: We don’t have a strong conviction on the gilt that will be sold via syndication. There are already 20/40/50-year gilts that are not currently at benchmark size (and we expect the recently launched 4.75% Oct-43 gilt will be reopened via auction rather than syndication going forward). Either the 40-year 4.00% Oct-63 gilt or the 50-year 1.125% Oct-73 gilt are possible candidates. In terms of potential new gilts the 3.75% Oct-53 gilt is already approaching benchmark size so there is potential for a new 30-year gilt, possibly with a July 2054 maturity. There are also some gaps around the 2048 and 2058 areas in terms of current coupon gilts.
  • 4.75% Oct-43 gilt: MNI expects a first reopening via auction of the new 20-year gilt that was launched via syndication last week. With the extra auction, there is potential for that this gilt to also be chosen to be reopened on 13 December.
  • 3.75% Oct-53 gilt: MNI expects up to 2 auctions in the quarter (2 if the syndication is not in the 30-year area, the number of long-dated auctions remains at 4 and there is no 30-year green gilt auction).
  • 1.50% Jul-53 Green: MNI expects to see one auction in the quarter.
  • Other long-dated gilts: MNI notes that we have not seen a gilt with a residual maturity of 31 years or greater sold via auction in this fiscal year to date. Since the end of 2021 the only gilt of this maturity on offer has been the 0.50% Oct-61 gilt – although we do note that the 1.125% Oct-73 gilt was offered via tender in September. We see a good chance that one of these gilts is reopened via tender (if not via syndication) in the quarter but still think it’s unlikely the DMO will want to offer either via conventional auction for now.
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