What the launch of 50-year gilts means

50-year gilts – at Moneyweek.co.uk - the best of the week's international financial media.

Today the UK's Debt Management Office issues a 50-year gilt the first of its kind. The new offering will comprise of £2.5bn of 2055-dated paper, carrying a coupon of 4.25%. Who will this benefit? David Scammell, manager of the Schroder Gilt & Fixed Interest Fund takes a closer look at the Governments issuance:

The Government recognises the high level of demand that exists for high-quality, long-dated bonds. This has arisen from increased demand by defined benefit pension schemes, which are being driven largely by ageing maturity profiles and legislation which encourages these schemes to better match their assets against their liabilities. Despite additional issuance over recent years, the demand for long-dated bonds outweighs supply, and this has driven up their prices.

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