Britain sold a government bond at auction on Wednesday that will pay investors an annual return of 5.668% - the highest yield of any gilt sold since 2007, as markets demand extra returns in anticipation of further Bank of England rate rises.
The United Kingdom Debt Management Office sold 4 billion pounds of a government bond which will mature in October 2025 , which attracted strong demand at 2.77 times the volume of offer, up from 2.34 times when the gilt was previously sold on June 7.
Before that, the highest yield was in September 1999 when 2.7 billion pounds of 10-year gilts were sold at an average yield of 5.694%. The auction highlights how the cost of British government borrowing has shot up this year. When the October 2025 gilt was sold at auction last month the yield was 4.874%, and at its launch in January it paid investors a yield of 3.634%.to 5% from 4.5%, as Governor Andrew Bailey said inflation looked more persistent than expected, and financial markets currently expect rates to peak at 6.25% in December.
As a result, the real inflation-adjusted return for investors is likely to be far lower than when gilts last regularly had similar nominal yields in the late 1990s.
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