The UK government is set to sell a record £13 billion of 10-year bonds after attracting the highest-ever demand for such securities from investors keen to profit from the higher yields on UK debt, according to a Bloomberg report.
The government received more than £140 billion of orders for the new debt, which is being sold via banks in a syndication, the report said.
“Debt sustainability worries have decreased a bit and the dovish vote split has likely helped sentiment,” said Evelyne Gomez-Liechti, strategist at Mizuho International, referring to the UK central bank’s decision last week.
UK government 10-year yields rose to almost 5% last month, the highest since 2008. Those yields have since retreated to around 4.5%.
Bloomberg reported that the larger-than-expected sale this week has material implications for debt issuance by the UK government for the rest of the financial year, which runs until April.
The two remaining scheduled medium-maturity auctions will likely be around £1 billion smaller than their recent averages, according to Megum Muhic, a strategist at RBC.
“This all adds to the notion that today’s transaction marks the peak in gilt supply for the quarter,” Muhic said.
“The gilt supply schedule is set to be supportive of gilt cross-market outperformance through to the end of March.”