(April 15): The UK sold 10-year bonds at the highest yield since the global financial crisis, drawing record numbers of buyers keen to lock in returns that may fall back if the Middle East war comes to an end.
The 2036 gilt syndication raised a record £15 billion (US$20.3 billion) and attracted £148 billion of investor orders, the most ever, according to data compiled by Bloomberg. The notes will hand investors a yield of 4.9158%, the UK Debt Management Office said. That’s the highest for any 10-year gilt sale since 2008, the data show.
“The transaction delivered both the largest volume of demand as well as the largest number of investor orders ever seen in a gilt syndication, which demonstrates huge confidence in both the gilt market and the UK more generally,” said Sean Taor, the head of EMEA debt capital markets and syndicate at Banco Santander SA, one of the arranging banks on the sale.
Yields typically surge during times of heightened inflationary risks and have jumped since the war between the US and Iran started at the end of February. Benchmark 10-year gilt yields surpassed 5% for the first time since 2008 last month but could start to fall back if a two-week ceasefire is turned into a more permanent truce that sparks a global markets rally.
Tuesday has been the sixth busiest session ever for Europe’s publicly-syndicated debt market, according to data compiled by Bloomberg. Among others, Cooperatieve Rabobank UA drew orders for about four times the size of its €750 million (US$884 million) sale of Additional Tier 1 notes — the riskiest type of bank debt — while lender Mitsubishi UFJ Financial Group Inc’s €500 million sale pulled in bids of about nine times the deal size, according to separate people with knowledge of both transactions.
The strong demand for everything from sovereign to corporate paper comes as average yields on euro, high-grade bonds reach 3.65% — well above the 3.17% average for the last 12 months, a Bloomberg index shows. Yields peaked at as much as 3.82% at the end of March, the highest since July 2024.
See also: China’s sale of yuan bonds in Hong Kong draws record-low yield
UK bonds were among the worst-hit last month among major debt markets. While 10-year yields have since fallen back, they remain around 60 basis points higher than their pre-conflict level of 4.23%.
The heightened volatility of recent weeks has disrupted the flow of global debt deals and those that are hitting the market have come with bigger concessions to offset the perceived risks.
Uploaded by Isabelle Francis
