The Treasury has sold £4 billion of index-linked bonds having been swamped with demand for the 30-year debt instrument.
According to Reuters, bids for the new issue totalled £56 billion in what is the last bond sale of this tax year.
The government’s timing on inflation-linked gilts has not been great recently.
Soaring costs of repaying interest on ‘linkers’ issued under the quantitative easing programme when rates and inflation were at rock bottom is one reason why finances are so tight currently.
Issued with a coupon of 1.25% plus 1.5 basis points above the benchmark 2055 1.25% index link gilt, this latest issue is redeemable in 2054.
Gilt sales by the Debt Management Office in the year to March were around £237 billion including around £29 billion of index-linked bonds.
In the next fiscal year to March 2025, issuance is expected to rise to £265 billion or the second-highest on record after the pandemic peak in 2020/21.
Sales in the coming year are planned to include three index-linked gilt syndications, raising £9 billion, and 15 index-linked gilt auctions raising £19.9 billion, Reuters reported.