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

GILT AUCTION PREVIEW
GILT AUCTION PREVIEW: The UK Debt Management Office (DMO) re-opens it's new
10-year benchmark, Gilt 1.625% Oct-28 Gilt Thursday for Stg2.5bln in size. 
- BACKGROUND: The Bank of England has completed last round of APF reinvestment
operations and there are no redemption or coupon payments scheduled this week
either to support today's auction.
- RV: The yield on the Oct-28 Gilt has rallied by circa 7.5bps since hitting
1.625% on Tuesday but is roughly in the middle of its trading range of between
1.456% to 1.688% since it was launched on Mar 15. The 10Y spread to Bunds is
trading in the upper third of recent range but Gilts continue to look very
expensive to UST 10Y. The 2-10Y Gilt curve is extremely flat, but has bounced
off recent 2-yr lows seen last week although probably not enough to assist this
auction.
- HISTORY: By comparison, at the last 10Y auction, the DMO sold at an average
yield of 1.58% with cover of 2.62 times and tail of 0.2bp. 
- TIMING: Results are due to be announced around 0935GMT

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