(Bloomberg) — The UK is seeking to juggle the biggest sale of five-year bonds in more than a decade against a surge in borrowing costs.
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Traders will be closely watching the Debt Management Office’s auction of £4.25 billion ($5.3 billion) of new debt maturing in March 2030 to gauge whether demand materializes. The level of oversubscription, the excess orders for a sale, in an auction of 30-year bonds fell to the lowest in more than a year Tuesday.
The UK government is under pressure to quell a rapid rise in yields as it embarks on a spending spree that’s met some pushback from markets. Five-year gilt yields have risen almost 35 basis points since the beginning of last month to around 4.44%, close to the highest since 2023 on a closing basis, while 30-year yields are the highest in more than a quarter of a century.
The DMO needs to place a record number of short-dated securities this quarter, according to Megum Muhic, a strategist at Royal Bank of Canada, after the Bank of England’s bond-buying programs.
The auction bidding deadline is at 10 a.m. London time and the results will follow a few minutes later. Last month’s offering was oversubscribed 2.9 times, close to the lowest since 2023.
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