Financial basis

UK sells new 2073 indexed gilt with record volume

LONDON, Nov. 23 (Reuters) – Britain on Tuesday sold 1.1 billion pounds ($ 1.47 billion) of a new indexed gilt maturing in 2073, bookkeepers said, the most small volume issued in syndication since at least 2005 after the country reduced its 2021/22 Emission Plans.

The deal attracted more than 17.5 billion pounds of orders and was priced 3.5 basis points below the indexed gilt of March 2068, which is a price that is at the upper end of the initial forecast.

The demand for indexed gilts is generally high due to demand from pension funds and insurers who must hold debt to meet long-term inflation-indexed liabilities, such as future pension payments.

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Indexed debt has attracted greater demand in recent months as a surge in inflation pushed inflation-adjusted yields down to an all-time high.

The UK’s Office of Fiscal Responsibility cut its 2021/22 cash borrowing forecast by £ 83 billion last month, prompting the debt management office to cut sales of gilts for the remainder of the exercise of 58 billion pounds.

The volume of gilts sold on Tuesday was well below the record £ 12bn sold in a conventional 10-year gilter syndication in May 2020, when Britain rushed to raise funds at the start of the pandemic of COVID-19.

The new indexed gilt has a coupon of 0.125% and will mature in March 2073, making it the indexed gilt with the longest issue date. The March 2068 indexed gilt had a longer maturity when it was first issued in 2013.

($ 1 = 0.7477 pounds)

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Reporting by David Milliken Editing by William Schomberg

Our Standards: Thomson Reuters Trust Principles.


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