40-year gilt strong as UK borrows £385bn in 8 months

The head of the UK’s Debt Management Office (DMO) said on Tuesday he was confident bond investors would continue to buy UK gilts following almost £50 billion of demand for a 40-year UK government bond.

The UK sold £6.5 billion of the 0.5% 2061 gilt via syndication at a yield of 0.6626%, after receiving £49.6 billion of orders.

Barclays, Goldman Sachs, Morgan Stanley and NatWest Markets acted jointly as bookrunners.

The Debt Management Office said gilt proceeds for the financial year to date are £316.1 billion. The DMO is currently planning to raise a minimum of £385 billion via gilt sales for the April-November 2020 period.

Debt Management Office CEO Robert Stheeman said: “Today we have successfully re-opened our 2061 maturity gilt which, after only two transactions, we have been able to build up to £13.5 billion nominal in issue.

“This will help assure the liquidity in this relatively new bond as we proceed to establish its status as the 40-year benchmark gilt.

“That we have been able to establish the 2061 maturity so quickly reflects well on the scale of high quality demand we received from our core investor base today — as was also the case at thebond’s launch in May 2020.

“This has been another strong and smoothly executed transaction for the gilt market and I am very pleased with the response we have seen today.

“This strong support of our market participants, evidenced again today, is particularly encouraging in the context of our ambitious gilt financing programme; I am very confident of this support continuing.”

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