UK Successfully Auctions £1 Billion in Inflation-Linked Government Bonds
The UK Debt Management Office (DMO) has successfully auctioned £1 billion worth of index-linked government bonds (Gilts) with a coupon rate of 0.625%, maturing in 2045. Investor demand proved strong, with total bids surpassing the amount offered by more than three times.
During today’s auction, all competitive bids above the clearing price of £74.300 were accepted in full, while lower bids were rejected. The inflation-adjusted net price was set at £80.547887, resulting in a real yield of 2.235%. Accepted bids were awarded 64% of the amount submitted at the clearing price.
In total, £850 million in bids were allocated, with Gilt-Edged Market Makers receiving £150 million. Other participants were not awarded any bonds in this round. The DMO also confirmed that up to £250 million in additional Gilts will be made available to successful bidders at the non-competitive allocation price, as outlined in the accompanying information memorandum.
The auction attracted bids amounting to £3.189 billion, leading to a bid-to-cover ratio of 3.19. This figure highlights robust investor interest in UK government debt, particularly in securities that offer inflation protection.
The allocated bonds will be credited to CREST members—the UK’s securities settlement system—on the settlement date via member-to-member transfers.
These results, released via an official statement from the DMO, reflect the ongoing management of the UK’s sovereign debt portfolio and current market appetite for government securities.
