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

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

2023 Gilt Thursday for Stg2.5bln. 

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

quite some time. However domestic political risks have subsided and markets

still see 2 more rate hikes over next 3-years.

- RV: Outright, the Gilt 0.75% 2023 yield clearly broke above 0.90 level and

currently sits at 0.976%. 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 Dec 5, the DMO sold Stg2.75bln total at an average

yield 0.889%, bid-to-cover ratio 2.1 times and it tailed 0.3bps. 

- RESULTS: Auction results are due around 1035GMT.