UK Issues Bonds at Highest Borrowing Costs Since 1998

The UK is set to issue bonds at the highest borrowing costs since 1998, influenced by a global bond sell-off that has driven yields up and squeezed government finances. Sources indicate that the UK will issue benchmark-sized bonds maturing in January 2056 at a level approximately 0.75 to 1 basis points higher than the yield on the 2055 bonds. This will mark the highest yield for any bond issuance since the UK Debt Management Office was established in 1998. The impact of the global bond sell-off on UK bonds has been the most severe among major developed economies, with UK bond yields hovering near multi-decade highs. This issuance is expected to be priced later on Tuesday and is an increase of the £5.9 billion bond initially issued in May 2025 at a yield of 5.405%. Meghum Mukhich, a strategist at CIBC Capital Markets, stated that this issuance is expected to raise up to £5 billion. The yield on 30-year bonds was reported at 5.83% on Tuesday, having reached its highest level since May 1998 last week.

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