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

GILT AUCTION PREVIEW: The UK Debt Management Office will sell Stg2.5bln of

1.625% Oct-28 gilt Wednesday.

- BACKGROUND: This is a re-open of the 1.625% Oct-28, with Stg11.05bln

outstanding. 

- RV/HISTORY: Gilts have been under pressure in recent weeks on the back of a

perceived increase in the 'no deal Brexit' risk. The benchmark 10-year gilt

trades at 1.334% up from a July low of 1.185%. The curve has steepened as a

result of the long-end underperforming with the 2s10s spread widening to 59.1bps

from a July low of 45.5bps, while the 2s30s has pushed up to 102.4bps from

92.8bps. Credit risk has increased with the benchmark 5-year CDS spread

increasing to 24.0bps from a YTD low of 14.7bps in February. Market based

measures of inflation compensation have been broadly stable with the 5-year

breakeven trading within a 2.95-3.00 band through July. The 1.625% Oct-28 gilt

trades at 1.477%, 12.4bps inside the comparable Stg swap. 

- TIMING: Results are due shortly after the auction closes at 0930GMT.