Investors Pay to Lend Money to the UK 
Wednesday, January 11, 2012, 10:18 AM
Posted by Glazers
Yesterday the Treasury sold gifts which will pay returns below the level of inflation for only the second time ever, when the Debt Management Office sold £700 million of inflation-linked bonds which will mature in 2047.

The 35-year gifts were adjusted to exclude inflation and therefore sold with a rate of 0.116pc; meaning investors were accepting a small real-terms loss in exchange for lending their cash to the UK.

Bond yields are partly a sign of the markets’ confidence in a governments ability to repay their debits in future; and the greater the demand for bonds, the lower the interest rate a borrowing government has to pay buyers.

Treasury sources have highlighted that amid fears for the weaker European economies, the UK gift sale is a sign of the markets’ confidence in the Coalition government.

For more information, please contact Glazers, Chartered Accountants London or visit www.glazers.co.uk




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