Investors pay to lend money to UK

T

THE-BEAKER

For only the second time ever, the Treasury sold government bonds — known as gilts — that will pay returns below the level of inflation.

The Debt Management Office yesterday sold £700 million of inflation-linked bonds that will mature in 2047 on Tuesday. Adjusted to exclude inflation, these 35-year gilts sold with a rate of -0.116pc, mean investors were accepting a small real-terms loss in exchange for lending their cash to the UK.

Bond yields are partly a sign of markets’ confidence in a government’s ability to repay their debts in future. The greater the demand for bonds, the lower the interest rate a borrowing government has to pay buyers.

Amid continued fears for the weaker European economies, investors are increasingly attracted to the bonds of governments they believe will be stable enough to repay their loans. Germany also sold bonds at a negative yield for the first time yesterday.

Treasury sources highlighted the UK gilt sale as a sign of market confidence in the Coalition government.


http://www.telegraph.co.uk/finance/economics/gilts/9006468/Investors-pay-to-lend-money-to-UK.html
 
why anyone would lend to UK at any rate is beyond me, they are broke and they all act like billionaires, and they have no plan to pay it back and the only thing going in UK is the Finance, real estate, insurance business and some very overrated educational institutions.


Quote from THE-BEAKER:

For only the second time ever, the Treasury sold government bonds — known as gilts — that will pay returns below the level of inflation.

The Debt Management Office yesterday sold £700 million of inflation-linked bonds that will mature in 2047 on Tuesday. Adjusted to exclude inflation, these 35-year gilts sold with a rate of -0.116pc, mean investors were accepting a small real-terms loss in exchange for lending their cash to the UK.

Bond yields are partly a sign of markets’ confidence in a government’s ability to repay their debts in future. The greater the demand for bonds, the lower the interest rate a borrowing government has to pay buyers.

Amid continued fears for the weaker European economies, investors are increasingly attracted to the bonds of governments they believe will be stable enough to repay their loans. Germany also sold bonds at a negative yield for the first time yesterday.

Treasury sources highlighted the UK gilt sale as a sign of market confidence in the Coalition government.


http://www.telegraph.co.uk/finance/economics/gilts/9006468/Investors-pay-to-lend-money-to-UK.html
More...
 
These are negative REAL yields, not to be confused with negative nominal yields. There's a whole variety of reasons why real yields are negative, for a whole variety of sovereign issuers. Negative real yield doesn't mean that an investor pays to lend money to the UK government.
 
You must log in or register to reply here.
Back
Top