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

GILT AUCTION PREVIEW: The UK Debt Management Office (DMO) taps the 6Y Gilt 0.75%

2023 Gilt Thursday for Stg2.75bln. 

- BACKGROUND: There are no coupons or redemption payments in the Gilt market for

quite some time. Brexit negotiations are coming to a head and stage 1 should be

concluded in the coming 3-4 days.

- RV: Outright, the Gilt 0.75% 2023 has yielded very close to 0.90% since

mid-Sept and is currently at 0.916%. Switches from shorter maturity debt like

the 5Y benchmark 0.5% Jul-22 do not look particularly attractive at present, in

part because the Gilt curve has shown few trends lately. There is unlikely to be

much switching from USTs where the 5Y US-UK spread is at its highest since

March. Spreads to peripheral European sovereign debt do look attractive. 

- HISTORY: At the last tap on Nov 9, the DMO sold Stg2.75bln total at an average

yield 0.831%, bid-to-cover ratio 2.5 times and it tailed 0.2bps. 

- RESULTS: Auction results are due around 1035GMT.