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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