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Gilt Sales Show U.K. Rating Not a Concern

setmefree2
setmefree2 Posts: 9,072 Forumite
Mortgage-free Glee!
in Debate House Prices & the Economy
Gilt Sales Show U.K. Rating Not a Concern, DMO Says

 Feb. 24 (Bloomberg) -- U.K. bond sales show most investors are unfazed by speculation Britain’s recession and soaring debt burden will hurt its credit rating, according to Robert Stheeman, chief executive officer of the Debt Management Office.
Investors accepted the lowest yield on record to buy three- year gilts at an auction last week, according to the DMO, which oversees debt sales on behalf of the U.K. Treasury. The government plans to sell a record 146.4 billion pounds ($212 billion) of bonds in the year to March 31 as tax revenue wanes.
“We are selling a lot of our debt at historically very low yields,” Stheeman said yesterday in an interview.

http://www.bloomberg.com/apps/news?pid=20602095&sid=aIfFFUQRx8rs&refer=govt_bonds

So that's today's good news:D
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Comments

  • Reaper
    Reaper Posts: 7,357 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Photogenic
    I find it bizzare that people are buying low yield gilts when there are company bonds so well priced that even if some go to the wall they would still outperform gilts. Or am I underestimating the risk of company bonds?
  • setmefree2
    setmefree2 Posts: 9,072 Forumite
    Mortgage-free Glee!
    Reaper wrote: »
    I find it bizzare that people are buying low yield gilts when there are company bonds so well priced that even if some go to the wall they would still outperform gilts. Or am I underestimating the risk of company bonds?

    I was thinking of corporate bonds for my pension but I've just read this

    http://www.bloomberg.com/apps/news?pid=20601009&sid=ahcAiteOAV4U&refer=bond

    "Investment-grade corporate bonds are the next “ugly bubble”

    Ummm:cool:

    EDIT - I'm Currently partly in UK government gilt fund which is also in a bubble. My pension is actually making money - trouble is I have to work out when to bail out smiley_shock.gif
  • Masomnia
    Masomnia Posts: 19,506 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    Hopefully that should keep the 'Britain is bankrupt' brigade quiet for a while.
    “I could see that, if not actually disgruntled, he was far from being gruntled.” - P.G. Wodehouse
  • mewbie_2
    mewbie_2 Posts: 6,058 Forumite
    1,000 Posts Combo Breaker
    Masomnia wrote: »
    Hopefully that should keep the 'Britain is bankrupt' brigade quiet for a while.
    Britain is bankrupt.
  • setmefree2
    setmefree2 Posts: 9,072 Forumite
    Mortgage-free Glee!
    Masomnia wrote: »
    Hopefully that should keep the 'Britain is bankrupt' brigade quiet for a while.

    No chance topic-no-connection.jpg
  • setmefree2
    setmefree2 Posts: 9,072 Forumite
    Mortgage-free Glee!
    mewbie wrote: »
    Britain is bankrupt.

    doh.gif
  • Reaper
    Reaper Posts: 7,357 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Photogenic
    setmefree2 wrote: »
    "Investment-grade corporate bonds are the next “ugly bubble”
    Damn, there's nowhere left. I guess that's why everybody is buying gilts.
  • Masomnia
    Masomnia Posts: 19,506 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    mewbie wrote: »
    Britain is bankrupt.

    Haha I was asking for that...
    “I could see that, if not actually disgruntled, he was far from being gruntled.” - P.G. Wodehouse
  • setmefree2
    setmefree2 Posts: 9,072 Forumite
    Mortgage-free Glee!
    Reaper wrote: »
    Damn, there's nowhere left. I guess that's why everybody is buying gilts.

    Which is also a bubble:rolleyes:
  • monkeyman1974
    monkeyman1974 Posts: 41 Forumite
    Reaper wrote: »
    I find it bizzare that people are buying low yield gilts when there are company bonds so well priced that even if some go to the wall they would still outperform gilts. Or am I underestimating the risk of company bonds?

    That's the perverse economics of deflation/quant easing. Govt's will only do it while the 5hit is hitting the fan, so even though the sovereign debt feels less secure, it stills feels more secure than alternatives (company bonds, equities, property, exotics etc). At least in the UK we can print £'s so can't default. Try that if you are in the Eurozone. Ooops you can't! The gilt markets recognise this.

    So yes, this feels like good news
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