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

GILT AUCTION PREVIEW: The UK Debt Management Office (DMO) taps Stg950mln of the

I/L Gilt 0.125% Gilt 2036 on Thursday. 

- BACKGROUND: The DMO currently does one linker tap per month and the Stg950mln

being sold is a about an average size and is equivalent to around GBP2.6mln/bp.

It will not be tapped again this quarter. 

- RV: The IL36 real yield appears to be fairly expensive when compared to other

real yields in the 20-30Y sector. However, the demand appears strong in the

sector according to reports from the market. Real yields are -1.53%, which is

around 10bp lower than just one week ago but still near the top of the one year

range, not surprising giving the BoE's more hawkish stance lately. RBS agree and

write "we see limited relative value in the auction bond, with the main appeal

being in terms of outright yields"

- HISTORY: The last 2036 index-linked auction that the DMO conducted was on 13

Dec, 2017 and it was Stg0.8bln with a bid to cover ratio of 2.34 at a yield of

-1.65%. 

- RESULTS: Auction results are due at around 1035GMT