The UK's Debt Management.......>

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

Stg1.5bln on Thursday. On offer is the 1.75% gilt Jan-49.

- BACKGROUND: At the last auction of the 1.75% gilt Jan-49 on December 6, Stg

1.48bln was sold at at average yield of 1.909% and bid-to-cover of 2.82x.

- RV/HISTORY: The long-end of the gilt curve has been under pressure since

October as global economic headwinds have intensified (the ongoing US-China

trade dispute, political dysfunction in Washington and seemingly perennial

concerns about Chinese growth) and the Brexit drama reaches its daunting

conclusion. The gilt curve has also flattened with the 2s30s spread narrowing to

96.9bp from 129.8bp at the end of November. The 1.75% gilt Jan-49 trades at a

yield of 1.769%, up from a YTD low of 1.661% and 20.2bp outside the comparable

GBP swap. Although it goes without saying, there is considerable headline risk

heading into Thursday's gilt auction as the market digests the outcome of the

Wednesday no-deal vote and prepares for the third parliamentary vote on

extending Brexit.

- TIMING: Results are due shortly after the auction closes at 1030GMT.