Britain sold 4.5 billion pounds ($5.6 billion) of a new 40-year bond on Tuesday after receiving record orders in a syndication, adding to signs that investors have taken the country's decision to leave the European Union in their stride. Dealers and investors placed orders worth 23.5 billion pounds for the new issue, which matures in July 2057, helped in part by relatively robust foreign demand, the UK Debt Management Office said.
That exceeds a previous record of 21.9 billion pounds when the DMO launched the 2.5 percent July 2065 gilt in October 2015.
"The bond ... provides much sought-after duration and a current coupon in a maturity area which is in demand by not only our core domestic investor base but overseas investors also; the latter were allocated just over 10 percent of the deal," DMO chief executive Robert Stheeman said.
The July 2057 gilt, which pays a 1.5 percent coupon, sold at a yield of 1.867 percent. This was equivalent to 2.5 basis points above the yield of the 4 percent 2060 gilt and reflected a price at the top end of initial guidance, as is usual in British government bond syndications.
Order books opened an hour later than usual, so the book-building process avoided straddling the Supreme Court's decision on whether Prime Minister Theresa May had the power to start talks to leave the European Union without a vote in parliament.
The court rejected the government's argument that it did not need to put the issue to a vote by lawmakers, but May still looks likely to stick to her plan to start formal Brexit negotiations before the end of March.
Citi, HSBC, J.P. Morgan and Santander acted as joint leads on the transaction, which completes the DMO's 14.6 billion pound programme of conventional gilt syndications for this financial year. In total, the DMO has sold 120 billion pounds of gilts out of a targeted 146.5 billion pounds for 2016/17.
The broader gilt market had a choppy day on Tuesday - buffeted by the court decision and later weak supply at a BoE gilt buy-back. Ten-year yields rose 3 basis points on the day to 1.40 percent but prices fell less than those of German Bunds.
Foreign investors often account for less than 5 percent of the demand for the long-dated conventional gilts and index-linked bonds which the DMO sells via syndication.
However they accounted for 13 percent of demand at a syndication on October 25, and according to the Bank of England there were record purchases of gilts by foreign buyers in the three months to the end of November.
This suggests they are relatively unbowed by June's vote to leave the European Union - though it may also reflect their need to boost gilt holdings after sterling's near 20 percent fall against the dollar in order to retain a fixed percentage of British debt in their portfolios.
BoE Governor Mark Carney warned before the referendum in June that a vote to leave the EU could leave Britain reliant on "the kindness of strangers" to finance its current account deficit.
British finance minister Philip Hammond noted last week that sterling's latest volatility could dampen foreign appetite for gilts, and the country's finance ministry received slightly mixed messages from investors in an annual meeting on Monday.