LONDON: Long-dated British government bond prices rose on Thursday, helped by a strongly-bid auction of a 30-year gilt and a poll suggesting most Scots intend to vote to stay in the United Kingdom.
Benchmark 20- and 30-year gilt prices made their first daily gain this week after three days of heavy losses sparked by opinion polls suggesting the Sept. 18 referendum on Scottish independence was too close to call.
Late on Wednesday after markets had closed, a new poll showed a small lead for the campaign against independence, helping long-dated gilts pare some of the losses made earlier this week.
"There's been reasonable buying at the long end of the gilt curve, following the shifting sands in the Scottish independence polling story," said Mark Capleton, gilts strategist at Bank of America Merril Lynch.
The benchmark 30-year gilt yield was fell around 2 basis points on the day to 3.17 percent, not far off a session low of 3.147 percent hit after prices rallied following strong demand at the UK Debt Management Office's sale of 2 billion pounds ($3.25 billion) of the January 2045 gilt.
Capleton said limited offers to sell long-dated gilts to the Bank of England on Tuesday - when it bought 1.6 billion pounds of gilts with maturities over 15 years - had been a clue that demand would be strong for the auction on Thursday.
The DMO received bids worth 1.99 times the 2045 gilts on sale - the greatest demand at a conventional gilt auction since June 10.
The gilt was launched via syndication in June, when it enjoyed record demand.
"It went pretty well," said Capleton, who noted that the BoE will hold further reverse auctions over the next few weeks.
"Whatever happens with the Scotland vote, the BoE still has the best part of 10 billion pounds left to go into the market, so that's going to be supportive," he said.
The BoE's next gilt purchase operations will take place in the week beginning Sept. 29.
The yield spread between 10-year gilts and the equivalent German Bund was little changed on the day at 150 basis points.
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