LONDON - The UK Debt Management Office (DMO) successfully auctioned £4 billion of the 4¼% Treasury Gilt 2034, witnessing robust demand as bids exceeded the amount on offer by nearly three times. The auction, which took place on Wednesday, demonstrated investor confidence in UK government securities.
The gilts were sold with a yield range between 4.801% for the highest accepted bids and 4.817% for the lowest. The average price for non-competitive bids settled at £95.770, slightly lower than the highest accepted price of £95.817. Competitive bids that were priced above the lowest accepted price were fully allotted, while those below were rejected.
In total, competitive bids accounted for £3.4 billion of the gilts sold, with the remaining £600 million allotted to gilt-edged market makers. No non-competitive bids were received from other parties. The auction was covered 2.80 times, indicating a strong appetite for UK government debt, with total bids amounting to £11.218 billion.
The DMO also announced that an additional amount of up to £1 billion of the stock would be available for purchase at the non-competitive allotment price for successful bidders, in line with the terms set out in the Information Memorandum.
The auction results showed a 'tail' of 0.9 basis points, which is the difference in yield between the lowest accepted price and the average accepted price, reflecting a tightly clustered bidding range.
Settlement for members of CREST, the UK's securities settlement system, will take place through member-to-member deliveries on the agreed settlement date.
The successful auction underscores the continued market confidence in UK government securities, as investors are willing to lend substantial funds to the government at a stable rate of interest. This event is based on a press release statement from the UK Debt Management Office.
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