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

GILT AUCTION PREVIEW: The UK Debt Management Office will tap the market for

Stg2.25bln on Tuesday. On offer is the 1.75% Jan-49 gilt.

BACKGROUND: This is the fourth auction of the issue and it is currently being

built up as the 30-year benchmark. With the total amount outstanding rising to

Stg8.5-9bln after tomorrow's auction and PAOF, we believe the Jan-49 gilt will

start to be seen as the 30-year benchmark imminently. It will be tapped again on

13 August.

- RV/HISTORY: The Jan-2049 gilt is trading in line with the current 30-year

benchmark, the July-2047 gilt. Yields have fallen by around 30bp since the

Jan-49 gilt was last tapped, although yields have fallen more in shorter

maturities as the 10s30s curve has steepened. The last two Jan-49 auctions have

seen a bid-to-cover in the 2.3x-2.4x range with a tail of 0.4bps.

- TIMING: Results are due shortly after the auction closes at 10:30BST with the

PAOF available to successful bidders until 14:00BST.