Investors pay 2.95% to lend UK £1bn in Gilts auction

Investors competed to pay the UK almost 3% to lend the country £1bn in the latest auction of gilt-edged bonds.

The Debt Management Office said it received bids of £2.57bn for the 0 1/8% index-linked Treasury gilt 2028. At a real clean striking price of £126.751 the real yield on the debt is -2.95%.

The DMO said it allotted £850m to bids and £150m to non-competitive bids from Gilt-edged market makers. The auction of government debt was 2.57 times covered by bids.

The UK sold negative-yielding government bonds for the first time in May, meaning investors who hold the debt to maturity will get back less than they paid. Negative yields reflect worries about the economy and expectations that the Bank of England will loosen monetary policy further.