Key facts
- Britain sold £4.25 billion of 30-year bonds on Tuesday with the highest yield since 1998.
- The 5.375% 2056 gilt was sold at a yield of 5.8168%.
- Investor demand for the bond was strong, with orders exceeding £85 billion.
- The UK Debt Management Office (DMO) established the record for highest yield at a gilt auction or syndication in 1998.
- Chancellor John Healey emphasized fiscal discipline and spending control ahead of his upcoming budget.
Britain sold £4.25 billion ($5.75 billion) of 30-year bonds on Tuesday with the highest yield since comparable records began in 1998, as rising global borrowing costs and concerns over inflation cast a shadow over new finance minister John Healey's plans for his first budget.
The 5.375% 2056 gilt was sold via syndication with a yield of 5.8168%, locking in the impact of the recent rise in yields. This yield exceeded the previous record of 5.79% set at a DMO auction in May 1998.
Demand for the 30-year benchmark was strong, with investors placing more than £85 billion in orders. The bond was priced at the tight end of initial guidance, with a yield 0.75 basis points above that of the 4.25% 2055 gilt.
Chancellor Healey stressed the importance of fiscal discipline and spending control ahead of his October 28 budget. The Office for Budget Responsibility forecast debt interest costs would reach £109 billion this year. Long-dated conventional debt is on course to make up less than 10% of the £246 billion of gilt issuance planned for this financial year.