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5 September 2017
SYNDICATED RE-OPENING OF £4.0 BILLION NOMINAL OF 2½% TREASURY GILT 2065: RESULT
The United Kingdom Debt Management Office (DMO) announces that the syndicated re-opening of £4.0 billion (nominal) of 2½% Treasury Gilt 2065 has been priced at £132.145 per £100 nominal, equating to a gross redemption yield of 1.547%. The transaction will settle, and the fifth tranche of this gilt will be issued, on 6 September 2017, at which date the gilt will have £19.3 billion (nominal) in issue. Proceeds from today’s transaction are expected to amount to approximately £5.3 billion (cash1).
The offering was priced at a yield spread of 0.5 basis points (bps) above the yield on 3½% Treasury Gilt 2068, which represented the tight end of the published price guidance. The UK domestic market provided the predominant support for the issue, taking around 90% of the allocation.
This was the third transaction of the DMO’s 2017-18 syndication programme, which was planned to raise a minimum of £22.0 billion (£9.5 billion of long conventional gilts in two transactions and £12.5 billion of index-linked gilts in three transactions).
Commenting on the result, Sir Robert Stheeman, the Chief Executive of the DMO, said:
Today’s transaction has seen another very successful re-opening of the UK’s 2½% 2065 gilt. I continue to value highly the capacity of the gilt market to take down this supply, and it reflects very well on the efficiency and depth of the market.
Once again very strong support was mobilised from our core investor base. Indeed, the impressive quality of demand today was such that we decided to increase the size of the deal by £800 million (cash) relative to our original planning assumption for the transaction. As a result, the outstanding size of the 2½% 2065 gilt now stands at £19.3 billion.
Today’s sale has successfully concluded this year’s conventional syndication programme, and I look forward to continuing the success of the syndication programme in the index-linked sector. I greatly appreciate the support which our gilt market stakeholders have again shown for our syndications, together with their contributions to the successful delivery of our overall financing remit.
Syndication programme and the unallocated supplementary amount
Given the strength and quality of demand at this transaction, the DMO has decided to move £0.8 billion (cash) from the unallocated supplementary issuance amount to the long conventional syndication programme in 2017-18 (increasing the size of that programme to £10.3 billion and the minimum size of the overall syndication programme to £22.8 billion). The size of the remaining unallocated supplementary amount has accordingly been reduced to £1.7 billion.
1 Figures in this Press Notice are in cash terms unless indicated otherwise.