British investors accounted for the lion's share of demand at the syndicated sale of a 50-year index-linked gilt, although foreign participation was at a record high, the UK Debt Management Office said on Tuesday. "The UK domestic market again provided the main support for the issue, taking around 83 percent of the allocation, but overseas participation was at a record level," the DMO said.
Demand for the index-linked gilts due 2062 was strong, with investors submitting orders for 11 billion pounds of the bond and books on the deal closed just 45 minutes after they opened - a record time for an index-linked syndication and also for any book of this size, according to the DMO.
"Given the amount of risk on offer today - which we should not underestimate - this result is a clear demonstration of ... the underlying strength of investor demand for our inflation linked securities against an ongoing challenging financial market backdrop," DMO chief executive Robert Stheeman said.
The gilt sold at a real yield of 0.04 percent, a record low for a 50-year linker at either auction or syndication, and 6 basis points below the last sale of the gilt in January. The DMO added that there would be no further mini-tenders in the remainder of the first quarter of the financial year. Total issuance by syndication for 2012/13 would be increased by 500 million pounds to 33.0 billion pounds, while issuance by mini-tender would be reduced by the same amount to 6.5 billion pounds, the DMO said.
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