On Tuesday, Britain received an order for a 30-year inflation-linked government bond for 65.99 billion pounds. On this, the United Kingdom Debt Management Office says, “a record level of demand as higher government borrowing costs drew investors in.” The DMO further elaborates that it would be an issue worth 4.25 billion pounds of the 1.25% November 2054 index-linked gilt. This makes the total amount in issue rise to 12.75 billion pounds.
The syndication received a strong order book, slightly exceeding the £64 billion recorded when the bond was last sold via syndication in July. This marked a record for an index-linked gilt.
On Tuesday, the syndication sold the 1.25% index-linked 2054 gilt, yielding four basis points higher than the November 2055 index-linked gilt. This sale represented a price at the top end of the initial guidance, as is typical for gilt syndications. This meant a real yield of 1.5692%, higher than the 1.4236% seen in July’s sale. It was the highest inflation-adjusted borrowing cost for British government bonds since these sales began in 2005.
