UK Super Gilts On The Way

UK Super Gilts On The Way.

The government is considering issuing a new long-term bond (Gild edged security), which it hopes will cut the country’s interest payments for years.  At present, the UK government, like others, issues bonds - a form of IOU - which pay interest before being paid back after a fixed term.

A long-dated bond typically gives the government 30 years to repay in full.  The new plan is looking at issuing bonds with a 100-year repayment date, or even longer.  The theory is that these super long-term gilts would allow the government to lock in the current record low interest rate for a very long time.

According to treasury officials the low cost of long-term interest rates will save the country £20bn in debt interest over the next 5 years.