U.K. Bonds Fall Amid 30-Year Sale Analysts Say Offers Value

  • DMO auctioning 1.75 billion pounds of gilts due in 2045
  • Nation's 30-year debt yields near highest in three weeks

U.K. government bonds extended declines into a fourth day as the nation sells 1.75 billion pounds ($2.5 billion) of securities due in 2045, the first long-dated conventional gilt offering of the new fiscal year.

Thirty-year yields reached the highest in three weeks Tuesday and strategists at Societe Generale SA and Barclays Plc said the jump would help demand for the securities being sold. At a previous 30-year auction, bonds were issued with an average yield of 2.22 percent and investors bid for 1.73 times the debt on offer.

The U.K.’s Debt Management Office introduced a slew of changes to the way it conducts bond sales this month, including smaller auction sizes.

“The 2045s are the highest-yielding gilt along the curve, meaning there may be some interest from those seeking outright returns,” SocGen strategists including London-based Jason Simpson wrote in a note. “It looks decent from a relative-value perspective. We think the auction should go relatively well and should allow the 30-year to perform better.”

The U.K. 30-year gilt yield rose one basis point, or 0.01 percentage point, to 2.34 percent as of 10 a.m. London time, a day after climbing to 2.35 percent, the highest since March 23. The 3.5 percent security due in January 2024 fell 0.225, or 2.25 pounds per 1,000-pound face amount, to 124.15.

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