UK sells GBP 1.5bln 0.125% 2028 Gilt via Tender: b/c 3.76x (prev. 5.35x), average yield 4.272% (prev. 4.090%)

A softer gilt tender: cover fell sharply from the previous auction of this line while the average yield backed up, the classic signature of weaker demand at prevailing levels. Gilt auctions of intermediate maturities have historically been well absorbed given natural pension and liability-driven demand for that part of the curve, so a drop in cover of this size stands out more than it would at the long end, where supply indigestion episodes have been the recurring stress point. The follow-ons that matter in past episodes of soft UK supply are the tail versus the when-issued level, whether the next DMO tender in a comparable maturity shows the same concession-building pattern, and any shift in dealer take-down versus end-investor demand. Repeated soft covers have previously fed into cheapening of the gilt curve against swaps and wider attention on the remit size and the Bank's sales alongside DMO issuance. A single weak tender is usually digested; a run of them is what has historically repriced the term premium.