LONDON (Reuters) – Britain will pay back part of the outstanding debt used to fund World War One next year, when it redeems government bonds first issued almost 90 years ago by then-finance minister Winston Churchill.
The finance ministry said on Friday that it would redeem 218 million pounds ($348 million) of 4.0 percent consols GBT4= – a rare type of bond with no maturity date – on Feb. 1 next year, to be funded by issuing new debt.
This is the first time this type of gilt has been redeemed since the late 1940s – in part because until recently it required lower interest payments than similar new debt.
Issued in 1927, the consols were used to refinance government bonds bought by Britain’s public to help fund World War One.
“For those of us who love the gilt market it’s a sad day – there’s a few old-timers crying in the corner,” said Barclays bond strategist Moyeen Islam. “But it’s symbolic more than anything.”
Speculation about the future of Britain’s long-standing perpetual bonds has grown because government borrowing costs are at historically low levels, making newly-issued debt cheaper to maintain.
On Tuesday, Britain achieved a yield below 3 percent at a syndicated sale of the 2068 gilt GBT3H68=, the longest-dated conventional government bond in any major advanced economy.
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