UK auctions off £3 billion in green bonds

LONDON - The United Kingdom (TADAWUL:4280) Debt Management Office (DMO) successfully auctioned £3 billion worth of 0⅞% Green Gilt due in 2033 on Monday. This latest issuance, part of the UK’s efforts to finance environmentally sustainable projects, attracted significant investor interest, with bids totaling £9.311 billion, making the auction over three times oversubscribed.

Competitive bids that were priced above the lowest accepted price of £74.744 were allotted in full, while those below were rejected. Bids accepted at the lowest price received 52.4475% of the amount they bid for. The highest accepted bid came in at £74.816, corresponding to a yield of 4.468%, and the non-competitive allotment price, which represents the rounded average accepted price, was set at £74.783 with a yield of 4.473%.

The auction’s "tail," which is the difference in yield between the lowest accepted price and the average accepted price, was a narrow 0.7 basis points, indicating a strong demand for the bonds and a condensed range of accepted bids.

Of the total amount allotted, £2.549.999 million was awarded to competitive bids, with gilt-edged market makers receiving a significant portion of £450 million. Only a nominal amount of £0.001 million was allotted to other non-competitive bids.

In line with the terms set out in the Information Memorandum, the DMO will not offer a Post-Auction Option Facility for this issuance. The settlement of the bonds will occur through member-to-member deliveries in CREST on the designated settlement date.

This auction is part of the UK’s ongoing commitment to fund projects that support the transition to a low-carbon economy, reflecting the government’s broader strategy to tackle climate change and promote sustainable growth.

The information in this article is based on a press release statement from the UK Debt Management Office.

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