U.K. Gilt Sale Sees Least Demand Since Crisis-Era Failed Auction

  • Investors bid for 1.07 times the 2021 gilts offered Wednesday
  • Gilts are climbing on demand for havens amid market turmoil

The last time the U.K. had a debt auction with such low demand was in the depths of the financial crisis.

Investors bid for 1.07 times the January 2021 gilts sold at an auction Wednesday, the lowest bid-to-cover ratio since a 2009 sale of 40-year securities that failed to attract enough bids to reach its target. The 1.5 percent gilts drew an average yield of 1.117 percent, the least since May 2013.

This was a “terrible auction,” said Marc Ostwald, an analyst at ADM Investor Services International in London. “There were no incentives both from absolute yield or relative value on the curve overall. Gilts are very dear.”

The flagging auction demand comes even as investors have been seeking gilts as a haven amid tumbling oil prices and turmoil in financial markets. The 10-year gilt yield dropped to the lowest level since April Wednesday, while the yield on five-year notes dropped to the least in almost a year on Jan. 15.

A spokeswoman for the U.K. Debt Management Office declined to comment on the auction’s demand.

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