Inflation-linked debt takes demand away from gilts
The Bank of England saw the cover ratio for the buyback of long-term government debt on Tuesday fall to 2.75 from 3.18, registered one week before in an auction for equivalent securities. The gilt repurchase operation worth £1 billion was within its Asset Purchase Facility.
The central bank accepted £1 billion from a total of just above £2 billion in offers for debt due in 2032 – the one with the shortest maturity, and 2045. The former series was bought for £662.3 million and the latter was repurchased in the amount of £337.7 million. They yielded 1.785% and 2.038%, respectively. Dealers also showed interest mostly in selling gilts maturing in 2034, 2036, 2047 and 2065.
Earlier in the day, the United Kingdom's Debt Management Office received orders of £11.7 billion for its index-linked bond worth £2.25 billion and due in 2056. The pricing is equivalent to at a negative gross real redemption yield of 1.466%.