The 4.75% Oct-54 gilt is due...>

GILT AUCTION PREVIEW: The 4.75% Oct-54 gilt is due to be sold at syndication

this week. The most likely day for this sale will be Tuesday if historical

precedent can be replied upon.

- The gilt was launched by syndicated sale earlier this year on 14 May with

Stg4.75bln nominal sold. Demand was strong with the offering priced at a yield

spread of 0.25bp below the 3.75% Jul-52. This spread at the time of writing had

moved the other way and at the time of writing was trading at a yield spread of

0.12bp above the 3.75% Jul-52.

- Demand at the long-end continues to be strong, particularly from domestic

pension funds, with domestic accounts taking around 86% of the launch

transaction.

- We would expect a minimum transaction size of Stg3.75bln nominal with the

potential to increase the size to Stg4.0bln nominal. Note that the price of the

issue has increased by over 15% since it was launched.

- Bookrunners: Barclays, BofA Merrill Lynch, Lloyds, Morgan Stanley