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UK Sells £4.25 Billion of Five-Year Debt as Borrowing Costs Soar - BLOOMBERG
James Hirai
(Bloomberg) -- The UK sold £4.25 billion ($5.3 billion) of five-year bonds on Wednesday, its biggest sale of that maturity in more than a decade, as a surge in borrowing costs complicates the government’s funding plans.
The Debt Management Office’s auction of new debt maturing March 2030 attracted three times more bids than the amount of securities available, slightly more than for its previous offer of similar notes last month.
The solid sale comes as traders scrutinize the level of oversubscription at auctions for any sign that appetite for the nation’s debt is weakening. Excess orders for a sale of 30-year bonds fell to the lowest in more than a year on Tuesday.
That’s added to pressure on the UK government to quell a rapid rise in yields. 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.
Investors must absorb a record amount of short-dated securities this quarter, according to Megum Muhic, a strategist at Royal Bank of Canada, after taking into account supply from the DMO and Bank of England.
UK bonds were little changed after the sale, with five-year securities yielding 4.45%.
(Updates with results of the bond auction.)
