British government bonds become "hot cakes"? Rumors say 1.4 trillion funds are frantic to grab the 13 billion "high-interest cake"

According to informed sources, the British government received over 140 billion in new bond orders in its latest round of bond issuance, which will be sold through banks in syndicated form. This issuance included a record-breaking sale of 13 billion (approximately $16 billion) in 10-year bonds, attracting a large number of investors who are looking to lock in yields near historic highs. The size of this bond issuance breaks the record set less than a month ago for UK government bond demand, showing investors' strong interest in higher yields amid the backdrop of the current Bank of England interest rate cuts. This also suggests that traders are no longer concerned about the fiscal discipline and oversupply issues that plagued the UK government and bond market earlier this year, leading to skyrocketing yields. Evelyne Gomez-Liechti, a strategist at Mizuho International, pointed out that concerns about debt sustainability have eased and the dovish voting results from the Bank of England may help boost market sentiment. The pricing range for these bonds has narrowed from the previous 5.5 to 6 basis points to a high of 5.5 basis points compared to similar bonds. Debt syndications are typically more expensive than auctions but allow the government to quickly raise large sums of capital and diversify its investor base. In October, UK Chancellor Rachel Reeves announced a massive bond issuance plan to support government spending. Last month, the yield on UK 10-year government bonds rose to nearly 5%, its highest level since 2008. Since then, yields have fallen slightly, with the yield rising 1.63% to 4.53% at the time of writing. The larger-than-expected auction this week will have a significant impact on the remaining UK government bond issuances for the rest of the fiscal year (until April). Megum Muhic, a strategist at Royal Bank of Canada, stated that the upcoming two scheduled auctions for mid-term bonds may be about 1 billion smaller than the recent average size. She noted, "All of this further underscores that today's trading marks the peak of UK government bond supply for the quarter, and the UK government bond supply plan will support the cross-market performance of UK government bonds before the end of March."