LONDON, April 24 (Reuters) - Investors showed very strong demand for 6.75 billion pounds ($8.39 billion) of benchmark 30-year British government debt sold on Wednesday, which looks on track to offer a record-high yield for a gilt sold via syndication.
Orders worth more than 90 billion pounds were placed for the July 2054 gilt at a syndicated sale of the 30-year benchmark , bookrunners on the transaction said, one of the highest levels of demand on record.
The highest total came at the launch of Britain's first "green" government bond in September 2021, which drew just over 100 billion pounds in orders from investors keen to fund environmental projects.
Orders at British government bond syndications are typically several times greater than the amount which is sold.
Price guidance for the 4.375% gilt was set for it to yield 1.75 basis points more than the 3.75% October 2053 gilt , representing a price at the top end of guidance, as normal at British gilt syndications.
The yield payable on the gilt - which will be confirmed later by the UK Debt Management Office - looks likely to be the highest for any British government bond sold since syndications began in 2005, although lower than the yields of some gilts sold at auction last year.
British government bond yields rose sharply in 2022 and 2023 as the Bank of England raised interest rates to a 14-year high to tame inflation. They have stayed high this year as persistent inflation - especially in the United States - has dampened investors' expectations for interest rate cuts.
The high borrowing costs are bad news for Britain's government, as they reduce the already limited leeway for finance minister Jeremy Hunt to make further tax cuts ahead of a national election expected in the second half of this year.
The sale is the first of four syndications of conventional government bonds planned by the United Kingdom Debt Management Office this financial year, which are intended to raise around 22 billion pounds, including 13.5 billion from long-dated debt.
On Tuesday the DMO revised up its total plans for gilt issuance this year by 12.4 billion pounds to 277.7 billion pounds, after higher-than-forecast government borrowing in the final months of the 2023/24 financial year.
BNP Paribas, Goldman Sachs, HSBC, Morgan Stanley and UBS are acting as joint leads on the transaction. ($1 = 0.8048 pounds) (Reporting by David Milliken Editing by William Schomberg and Gareth Jones)