UK's first green gilt smashes records with £90bn of demand

Reaper

Considering inflation is looming a bond paying 0.875% for a dozen years is not very appealing to me. Plus I am also sceptical it will be used to fund new green projects rather then replacing existing government spending.

Thrugelmir

Reaper said:

Considering inflation is looming a bond paying 0.875% for a dozen years is not very appealing to me. Plus I am also sceptical it will be used to fund new green projects rather then replacing existing government spending.

Green spend is on top. 

numbersrule

It's just a vehicle for generating investment.
The 0.875% is set at a level where environmentally friendly investors can feel confident that they are sacrificing just the right amount of fixed interest in order to feel like they've made a contribution to their undoubtedly good cause.

Malthusian

Eco_Miser said:

Surely gilts pay interest, rather than a share of profits, so are fundamentally non sharia compliant, whatever they may or may not be funding?

Most sharia accounts pay an "expected profit rate" which by the grace of Allah somehow always turns out to be the same percentage each month. And you can't lose anything, not even on an "opportunity cost" basis, as it's protected by the FSCS if it goes bust and if the "expected profit" goes down you can withdraw without penalty.

If you want to argue with the Almighty at the gates of heaven that a regular fixed payment in return for lending your money isn't interest, on the grounds of "they might not have paid it" (although they always did), then good luck with that.

It's all made-up loopholes to get around made-up rules.

MarkCarnage

Eco_Miser said:

Malthusian said:

I am not sure that raising money from Islamic investors (those would not buy traditional gilts due to a perceived risk that the money would end up being used to fund alcohol production or similar) constitutes discrimination against Hindu investors. If there is enough demand from Hindu investors for gilts that exclude cow farming then the Government will surely look to launch their own saffron gilt.

We don't have separation of church and state in this country anyway.

Surely gilts pay interest, rather than a share of profits, so are fundamentally non sharia compliant, whatever they may or may not be funding?

Precisely. The cynic in me says it's another way or reducing already low borrowing costs even further, particularly when there is legislation forcing large pension funds to comply with certain criteria on climate change about to come into force. Combined with the Pensions Regulator's focus on bond based investment strategies, it's getting close to directed investing now.