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2025-10-29 18:11:43
[UK £5 Billion 7-Year Bonds Issued: Demand Tested by Yield Spread Advantage] ⑴ The UK Debt Management Office will issue £5 billion of new 7-year government bonds with a coupon rate of 4.125% and a maturity date of March 2033. ⑵ The bonds are currently trading at a 11.5 basis point yield spread compared to the linear interpolation of bonds maturing in June 2032 and January 2034. ⑶ The new 5-year government bonds issued last Thursday also had a yield spread advantage, but the auction results were only in line with expectations and not outstanding. ⑷ The winning yield for the previous 5-year government bond auction was 0.4 basis points higher than the grey market quote, reflecting slight pricing pressure. ⑸ Although the bid-to-cover ratio reached a robust level of 2.8 times, it shows that investors remain cautious about bond pricing. ⑹ In the current market environment, investor demand for government bonds remains, but they are cautious about the timing of entry. (7) The new bond issuance will test the market’s ability to absorb longer-term UK government bonds, with particular attention to the final pricing level and bid-to-cover ratio.
