Impact of Moody’s downgrade of UK government gilts

25 February 2013 Over the weekend, I found myself musing on the consequences of the Moody’s downgrade of UK government debt for UK pension schemes. Does it really matter: are gilts really safe, what does it mean for the cost of financing the public debt and for pension deficits. In reality, I believe that the change of credit rating by one of the three big agencies tells us next to nothing new about the safety of gilts and that the Moody’s action is likely to have an extremely limited impact on gilt yields. It will likely continue the recent weakness…

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UK DMO : Super-long and Perpetual Gilts Consultation

7 June 2012 The United Kingdom Debt Management Office has launched a gilts consultation exploring the case for the issuance of gilts with longer maturities than those currently in issue and/or perpetual gilts. The DMO will focus on the depth and sustainability of investor interest and the impact of issuance on the structure and functioning of the gilt market. For reference, the longest conventional gilt is the 4% Treasury of 2060 (47 yr maturity, appx 23yr duration) : though various small undated gilts (such as the famous War Loans) exist. The longest linker is the 3/8% Treasury of 2062 (49…

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UK DMO : No CPI Gilts to be issued in 2012-13

6 December 2011 The UK Debt Management Office has concluded its consultation on the possible issuance of CPI gilts (as we reported here). As a result of this consultation, the DMO has announced that no CPI-linked gilts will be issued in 2012-13, though this does not preclude the issuance of such gilts in the medium term, should circumstances change. The DMO gives four broad reasons for its decision: The concern that the introduction of CPI-linked gilts could detract from the liquidity of the existing RPI-linked market The uncertainty about potential future changes in CPI calculation methodology and the possibility of…

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UK DMO : CPI linked Gilts Consultation

29 June 2011 The United Kingdom Debt Management Office has launched a consultation aimed at exploring the viability of launching a CPI linked gilts issuance program. Prior to committing to this, the DMO wish to establish the level of investor appetite and commitment to this product, both in absolute terms and relative to the well established RPI-linked gilt program. The consultation closes on 22 September 2011. The consultation paper is obviously relevant in the context of recent discussions on CPI vs RPI indexation. It is very accessible but investors may also prefer to consult with advisers or with their bond…

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