The UK Debt Management.........>

GILT AUCTION PREVIEW: The UK Debt Management Office (DMO) re-open 10-year

benchmark 1.25% July 2027 Gilt Tuesday for Stg2.25bln in size.

- BACKGROUND: This will be the fourth re-opening of the 10-year bond and takes

the outstanding size to E13.043bln following the auction. This issue is due to

be re-opened again on Sep 13. The auction comes ahead of Super Thursday, with

the BoE QIR seen as key focus and seen weighing on demand.

- RV: The issue trades at 1.284% mid-yield and whilst below recent cheap levels

-- overall, 10-year Gilt yield is much lower compared to previous re-opening on

July 6. Most strategists agree that the 2027 Gilt trades cheap on

2024-/2027-/2032 fly. That said, this issue isn't the cheapest to deliver into

the Sep futures contract, but remains part of the deliverability basket. 

- HISTORY: By comparison at the last auction on July 6, the DMO sold E2.5bln at

an average yield of 1.384% with a cover of 2.28 times and tail 0.2bps. Prior to

this, it was sold on June 1, where the DMO allotted Stg2.5bln at average yield

of 1.138% with cover of 2.14 times and tail of 0.1bp.

- TIMING: Results are due to be announced around 0935GMT.