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

UK Re-Opens 2046 Gilt Amid Drought for Long Inflation-Linkers.
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.
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.
Write to Tasos Vossos at (END) Dow Jones Newswires April 26, 2017 06:40 ET (10:40 GMT)

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