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

GILT AUCTION PREVIEW: The UK Debt Management Office (DMO) taps the 20-Year

benchmark 1.75% July 2037 Gilt Tuesday for Stg2.5bln. 

- BACKGROUND: The elephant in the room is the UK domestic political uncertainty

and potential BoE rate hike. There are no assisting coupon/redemption payments. 

- RV: The 1.75% 2037 Gilt trades at 1.995% mid-yield, which very close to the

best yield offered since Feb. Also, on the helpful side is the cheapening of the

UK curve to swaps and the security on sale today offers an ASW+30bp spread.

However, the curve is quite flat and the spread to the 10Y benchmark, UKT 4.25%

Dec-27 is 58.4bp, close to its lowest since February despite the slight pop

steeper in the past week.  

- HISTORY: The Gilt 2037 has not been sold since May, when the yield was 1.758%,

cover was 2.15 times and there was a 0.2bp tail. 

- RESULTS: Auction results are due around 0935GMT