UK Re-Opens 2046 Gilt Amid Drought for Long Inflation-Linkers

By Tasos Vossos Features Dow Jones Newswires

The U.K. Debt Management Office sold an additional 800 million pounds ($1.02 billion) of the 0.125% 2046 inflation-linked gilt Wednesday, bringing its total size close to GBP13.5 billion.

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The auction was struck at a real, or inflation-adjusted, yield of minus 1.674% and was 1.87 times oversubscribed.

The re-opening comes during a period of limited supply of long inflation-linked gilts by the U.K. sovereign.

The 2046 issue was last re-opened on Jan. 10. The DMO hasn't offered an inflation-linked gilt stretching 30 years or more since tapping the 0.125% 2065 inflation-linker through a syndicate of banks in late February.

And while the U.K. plans to hold two more auctions of inflation-linked gilts until the end of June, the offered bonds stretch only to 2026 and 2036.

Market participants mentioned this lack of long inflation-linked gilt supply as a factor supporting Wednesday's auction, given ongoing demand from so-called LDI investors who want to fund future liabilities.

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Write to Tasos Vossos at tasos.vossos@wsj.com

(END) Dow Jones Newswires

April 26, 2017 06:40 ET (10:40 GMT)