UPDATE 5-UK sells 30-year bond at record-high yield as prices slide

(Update order total and market move, adds DMO comment in paragraphs 3, 5, 9 and 11)

By David Milliken

LONDON, April 24 (Reuters) - Britain sold 6.75 billion pounds ($8.4 billion) of 30-year government debt at a record-high yield for a gilt syndication on Wednesday, as the sale took place against the backdrop of a slide in government bond prices.

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.

Investors placed 91.5 billion pounds of orders for the 4.375% July 2054 gilt at the syndicated sale of the 30-year benchmark , the third-highest volume of orders on record.

The yield represented a 1.75 basis-point premium over that of the 3.75% October 2053 gilt and a price at the top end of guidance, which is typical for British gilt syndications.

Along with other government bonds, gilt prices fell sharply on Wednesday, pushing the yield on the 30-year gilt to a five-month high of 4.806% as investors judged there was a reduced chance of more than one Bank of England rate cut this year.

British government bond yields rose sharply in 2022 and 2023 as the BoE raised interest rates to their highest since 2008 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.

FIRST OF FOUR SYNDICATIONS

The UK Debt Management Office sold the bond at a yield of 4.7818%, the highest for any British government bond sold at a syndication since they started in 2005, although lower than the yields of some gilts sold at auction last year.

Orders at British government bond syndications are typically several times greater than the amount which is sold.

The DMO said 91% of the gilt was bought by British investors. Domestic pension funds and insurers are the most common buyers of British long-dated government debt.

Wednesday's sale was 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.

"The strong response to this transaction bodes well for the delivery of the remainder of the annual programme," DMO Chief Executive Robert Stheeman said.

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 acted as joint leads on the transaction. ($1 = 0.8048 pounds) (Reporting by David Milliken; Editing by William Schomberg, Gareth Jones, Emelia Sithole-Matarise and Alex Richardson)