UK Sells More of 1.25% 2027 Gilt, Next Re-opening due Sep.

By Tasos Vossos Features Dow Jones Newswires

The U.K. Debt Management Office sold an additional 2.25 billion pounds ($2.96 billion) of its 1.25% July 2027 gilt on Tuesday, pushing the total size to more than 13 billion pounds.

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The yield was struck at 1.267%, around 12 basis points lower than this gilt's last re-opening in early July, which coincided with a broad sell-off in European government bonds after European Central Bank President Mario Draghi's speech in Sintra, Portugal.

Tuesday's auction was 2.56 times oversubscribed.

The July 2027 issue was launched only this March, but a series of re-openings in April, June and July have bulked up its size.

The next re-opening is scheduled for Sep. 13, around the time the Bank of England will be reinvesting proceeds from maturing gilts it holds under its bond-buying program.

RBC Capital Markets analysts don't expect much direct support for the September auction, as they calculate that the 1.25% 2027 gilt will be ineligible for BOE purchases during two of the reinvestment period's expected three weeks.

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Until then, the DMO will be offering more of the 0.125% 2026 inflation-linked gilt and the conventional July 2023-maturing bond in August.

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

(END) Dow Jones Newswires

August 01, 2017 06:35 ET (10:35 GMT)