The UK Debt Management Office (DMO) has announced an index-linked gilt auction scheduled for 22 July 2025, offering £1.7 billion of 1⅛% Treasury Gilt 2035. This issuance will be fungible with existing bonds, increasing the total outstanding nominal amount to £8,793.1 million (£9,058.9 million after indexation). The auction will follow a uniform price bidding convention, with index-adjusted accrued interest set at £0.553873521518 per £100 nominal, reflecting an index ratio of 1.03023 as of 23 July 2025.
Bidding will commence at 9:00 AM London time and conclude at 10:00 AM, with settlement occurring on 23 July. The gilt carries an ISIN code of GB00BT7HZZ68 and matures on 22 September 2035, paying semi-annual coupons on 22 March and 22 September. The next interest payment, classified as a long first coupon, falls on 22 September 2025. Market participants will have access to a Post-Auction Option Facility between 12:30 PM and 1:00 PM, allowing for additional purchases equivalent to 25% of the nominal amount allocated during the primary auction.
This issuance aligns with the DMO’s broader strategy to manage the UK’s debt portfolio, which currently stands at £619 billion in index-linked gilts (24.5% of total wholesale debt). The agency has been actively adjusting its issuance mix, reducing long-dated conventional gilt sales to 13% of total issuance for 2025/26 – the lowest proportion since 1990 – in response to declining structural demand from pension funds and rising borrowing costs. Meanwhile, short-dated gilts (up to 7 years maturity) will constitute at least 37% of issuance, reflecting investor preference for lower duration risk amid volatile yield conditions.
The DMO maintains transparency through regular updates on gilt sales progress, with detailed operational results published after each auction. This auction occurs against a backdrop of significant gilt market activity, including the DMO’s plan to issue £299 billion in government bonds during 2025/26 – the second-highest annual total on record. Thirty-year gilt yields recently peaked at 5.47% in January 2025, their highest level since 1998, underscoring the cost pressures influencing the DMO’s maturity distribution decisions.
Index-linked gilts have historically provided cost advantages for HM Treasury, generating £90.8 billion in direct savings (£184.7 billion in 2025 terms) for maturities issued between 1981 and January 2025. However, their inflation-linked structure increases fiscal sensitivity to price shocks, a consideration reflected in the 2025/26 financing remit’s allocation of just 10.3% to index-linked issuance. The DMO’s approach balances refinancing risk mitigation with market liquidity needs, maintaining an average debt maturity of 14.4 years – the longest among G7 economies.
The auction coincides with broader fiscal adjustments outlined in the Spring Statement 2025, which projects GDP growth of 0.2% by 2029-30 through planning reforms while adhering to revised fiscal rules. With gilt-edged market makers actively participating via Bloomberg’s Bond Auction System, the DMO aims to reinforce sterling’s position as a global reserve currency through predictable, transparent debt operations.
