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LONDON - The UK Debt Management Office (DMO) announced the successful auction of £1,000 million in index-linked government bonds, known as gilts, with demand significantly outstripping supply. The 0 5/8% Index-linked Treasury Gilt 2045 was sold at a striking price of £81.274, generating bids totaling £3,479 million – a coverage ratio of 3.48 times the amount offered.
The auction, which took place today, saw competitive bids above the striking price allotted in full, while those below were rejected. The DMO confirmed that 88.5714% of the amount bid for at the striking price was accepted. Additionally, gilt-edged market makers were allocated £150 million, and a negligible amount was allotted to others.
In a move to satisfy further demand, the DMO will offer up to an additional £250 million of the stock for purchase at the non-competitive allotment price. This option is in line with the terms outlined in the Information Memorandum.
The real yield of the gilt settled at 1.732%, with the inflation-adjusted clean price calculated using an index ratio of 1.07549, resulting in a price of £87.409374. The DMO specified that the inflation-adjusted price should not be rounded and is displayed to six decimal places for illustrative purposes only.
Successful bidders who are members of CREST, the UK’s securities settlement system, will have the stock credited to their accounts on the settlement date.
This press release statement from the UK Debt Management Office highlights the continued investor interest in UK government securities, particularly those offering protection against inflation. The high demand for the index-linked gilt reflects the market’s appetite for secure, inflation-adjusted returns amid economic uncertainties.
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