Investors ask for 50-yr gilt

Julian Harris
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INVESTORS are pushing for a new 50-year index-linked gilt for UK government bonds this autumn, it emerged yesterday.

The Debt Management Office (DMO) held a quarterly meeting with so-called Gilt-Edged Market Makers (GEMMs) -- primary dealers -- and with gilt investors on Monday to discuss its issuance plans for the next three months.

The 50-year note was the most popular choice for October and November, although the minutes also revealed support for a 30-year conventional gilt, dated either 2041 or 2043, and for a 40-year gilt maturing in 2052.

Meanwhile, strong demand for safe havens saw yields on American two-year Treasury notes drop to an all-time low yesterday. Yields on two-years sank to 0.22 per cent, officials said.

In Spain, average yields on the three-month bill yesterday touched their lowest since March at 1.357 per cent -- although the yield remained a long way above levels of around 0.3 per cent paid prior to the Eurozone debt crisis.

Spain’s Treasury saw solid demand for a short-term T-bill sale in yesterday’s auction, supported by the European Central Bank’s bond-buying programme.

Prime minister Jose Luis Rodriguez Zapatero yesterday announced plans to put a constitutional cap on government debt before elections in November, in a bid to prove it has its finances under control.