Index-linked gilts sold at lowest-ever negative yield

The UK has sold £700m of long-dated index-linked gilts for a negative real yield of 0.116%, the lowest level ever recorded.

While relatively small in size, the sale of the 0.75% November 2047 inflation-linked bonds marks just the second time that index-linkers have been sold at auction with a negative yield.

The auction had a bid-to-cover ratio of 1.9 times.

The only previous occurrence of a negative real yield for an auction of index-linked gilts was seen last August, when 2022 index-linkers were sold with a negative yield of 0.065%.

Elsewhere in Europe, safe haven flows have resulted in a number of conventional debt auctions producing negative yields in recent months as the eurozone crisis lingers on investors' minds.

These auctions have typically been for short-dated paper: yesterday Germany issued €4bn of 6-month debt at a negative real yield for the first time at auction.

Switzerland, Denmark and the Netherlands are among the other sovereign issuers to have sold bonds at negative yields as investors seek safety.