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

GILT AUCTION PREVIEW: The UK Debt Management Office (DMO) taps the 30-Year

benchmark 1.5% July 2047 Gilt Tuesday for Stg2.5bln. 

- BACKGROUND: There are Stg0.3bln of coupon payments but no redemption payments

this week. On Friday, PM May is due to make an important Brexit speech and

tomorrow is the FOMC.

- RV: 30 Year yield levels have leapt around 25bp in the past week. The 1.897%

on the UKT 2047 is very close to the highs seen in early July. While the

outright yield level looks okay, the curve has also flattened aggressively such

that the 10-30Y spread is 5bp tighter on the week at 60.2bp. This makes a curve

switch much less likely as an entry point into the auction and so outright

buyers need to turn up in significant numbers to make this auction a success.

- HISTORY: At the last tap on July 25, the DMO sold Stg2.5bln total at an

average yield 1.823% (around 7bp less than today), the bid-to-cover ratio was a

fairly typical 2.17 times and tailed by 0.1bps. 

- RESULTS: Auction results are due around 0935GMT.