U.K. 30-Year Bonds Rise as Debt Office Cuts Sales, Pays War Loan

U.K. 30-year government bonds advanced after the Debt Management Office cut its planned gilts sales for the fiscal year ending March and said it will pay off a perpetual loan that helped fund the First World War.

The gains pushed yields toward the record low set two days ago. Britain will sell 125.9 billion pounds ($197.4 billion) of gilts, compared with a previous target of 127.2 billion pounds, the London-based Debt Management Office said in a statement. The median estimate of 18 primary dealers surveyed by Bloomberg News was for the issuance to remain unchanged.

The revision was made after Chancellor of Exchequer George Osborne presented his Autumn Statement, or end-of-year outlook, to Parliament, made with five months to go before the next general election.

The yield on 30-year gilts dropped two basis points, or 0.02 percentage point, to 2.73 percent at 2:06 p.m. London time. The record-low yield is 2.639 percent. The 3.25 percent bond due in January 2044 rose 0.335, or 3.35 pounds per 1,000-pound face amount, to 110.47.

Investors may replace the war loan in their portfolio with other longer-maturity debt, Jim Leaviss, a London-based money manager at M&G Investments, which holds the perpetual securities, said today in a phone interview.

The Debt Management Office will also reduce planned net sales of Treasury bills by 5.5 billion pounds.

The 10-year yield rose one basis point to 1.98 percent.

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