The UK Debt Management Office has put a brave face on the disappointing response to its issue of 50-year gilts in mid-July. The DMO, in its second sale of these ultra-long bonds, sold £2.25 billion worth; but the sale drew bids of just 1.23 times the amount on offer, the smallest cover for any conventional gilt auction since the creation of the DMO in 1998. The DMO reintroduced the 50-year gilt in May after a break of more than 40 years.
The result was particularly surprising in the light of the supposedly enormous gap between the supply of long-dated assets and the demand for them. Changes...
