UK DMO confident of investor support after £50 billion demand for gilt

LONDON (Reuters) - The head of Britain’s Debt Management Office (DMO) said on Tuesday he was confident investors would keep on supporting the gilt market following nearly 50 billion pounds of demand for a 40-year government bond.

Britain sold 6.5 billion pounds ($8.32 billion) of the 0.5% 2061 gilt via syndication at a yield of 0.6626%, after receiving 49.6 billion pounds of orders.

The sale is part of a drive to raise funds for Britain’s response to the coronavirus pandemic, which has hammered the economy.

“This strong support of our market participants, evidenced again today, is particularly encouraging in the context of our ambitious gilt financing programme. I am very confident of this support continuing,” DMO chief executive Robert Stheeman said.

The level of demand for the gilt was slightly lower and the yield paid to investors a bit higher than when the gilt was first launched via syndication in May with a yield of 0.5852%. British investors accounted for more than 90% of demand at both sales. [nL8N2D14SY]

The DMO said the gilt sold with a yield of 0.5 basis points below the 4% 2060 gilt GBT460= and now had a nominal 13.5 billion pounds in issue, positioning it to become the new 40-year benchmark.

Barclays, Goldman Sachs, Morgan Stanley and NatWest Markets acted jointly as bookrunners.

The DMO aims to raise 110 billion pounds from the bond market between September and November, taking total gilt issuance in the first eight months of the financial year to a record 385 billion pounds.

Reporting by Andy Bruce; editing by Stephen Addison and David Milliken