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

GILT AUCTION PREVIEW: The UK Debt Management Office (DMO) taps the 40-Year 1.75%

2057 Gilt Tuesday for Stg2bln.

- BACKGROUND: This is the second tap of this ultra-long Gilt this year having

previously been syndicated twice in 2017. Today's tap takes the total amount

outstanding to Stg14.063bln. The auction is approx Stg6mn/bp DV01 in risk terms.

- RV: The 40-Year 1.75% 2057 Gilt trades at 1.644% mid-yield having seen around

9.4bps worth of concession since late March, albeit from rich levels. On the

curve, the recent steepening in the 2-/40-year yield spread by 10bps since Mar

22 also implies some cheapening on the curve. Strategists also note this

cheapening is also noted in ASW with the 47-/57-/68 fly. This is the only ultra

long Gilt scheduled this quarter ahead of new syndicated long conventional gilt

maturing in the period 2070-2073 that is scheduled mid to late May. This

cheapening and scarcity bodes well ahead of the auction. 

- HISTORY: The last auction on Feb 15 for Stg2.25bln at mid-yield 1.914%, cover

1.82, large 0.7bps tail.

- RESULTS: Auction result is due around 0935GMT.