RBC is circumspect in judging the strength of Tuesday's I/L Gilt tap, noting potential problems from next week's publication of papers from CPAC, the committee that recommends changes in RPI methodology. "With a material risk the CPAC recommend a change to RPI for 2013 that would be detrimental to bond holders, this auction could be more challenging than usual," says RBC. More positively RBC notes "back-up in real yields of 15bps in a week also puts the i/l 2034 at close to the best levels of 2012 and the strong performance of conventional [Gilts] in the 20-year sector leaves the bond looking attractive on breakeven." GBP1.25B of 0.75% i/l 2034 for sale at 0930 GMT.
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