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

GILT AUCTION PREVIEW
GILT AUCTION PREVIEW: The UK Debt Management Office (DMO) re-opens the 5-year
0.75% July 2023 Gilt on Wednesday for Stg2.75bln in size.
- BACKGROUND: With Stg26.48bn outstanding of the Jul-23 Gilt, this is set to be
the last tap of this issue before a new 5-year benchmark is sold on July 24.
There are Stg2.5bln in coupon payments this week that will support the auction.
- RV: Gilts have rallied since mid-May, with the yield on the 5-year benchmark
trading down to 1.017% on June 5 from a recent high of 1.238% on May 17. The
sovereign curve has flattened since the beginning of the year on the back of
short-end underperformance, with the 5s20s spread narrowing to 72bps from
101bps. The spread of the 5-year Gilt over the comparable Bund has widened to
125bps from 101bps on January 30. Inflation expectations have been broadly
stable, with the 5-year breakeven at 3.011% and little changed since the start
of 2018.
- TIMING: Results are due to be announced around 0935GMT

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