5.375% Treasury Gilt 2056

k6chris

ii are offering " early access to a new conventional gilt" as listed in the title.  As someone who has retired, the idea of something that pays over 5% for the next 30 years seems quite appealing.  What am I missing???

Thanks

DullGreyGuy

k6chris said:

ii are offering " early access to a new conventional gilt" as listed in the title.  As someone who has retired, the idea of something that pays over 5% for the next 30 years seems quite appealing.  What am I missing???

What are you concerned about missing? 

Obviously you are locking up the money for 30 years and whilst 5% is good now it won't necessarily be good in 10 or 20 years time. If you need to sell the gilt early to get access to funds then you can be in or out the money depending on what's happened to the market, interest rates and rating of the UK goverment 

Hoenir

Much depends on your personal objectives. 

Cobbler_tone

k6chris said:

What am I missing???

That I won't be here in 2056. 

DRS1

Stupid question but what will it cost?

Can you get £1 nominal for £1?

rjmachin

DRS1 said:

Stupid question but what will it cost?

Can you get £1 nominal for £1?

From https://www.hl.co.uk/shares/ipos-and-new-issues/treasury-2056-gilt-launch:

Unlike new bond issues, you will not know the price (typically £100 per bond or £1 per unit) when making an application. The price will be negotiated between syndicate members and prospective investors on Tuesday 20 May. You will receive the new issue price which may be above £100 per gilt or £1 per unit

Minimum application of £1,000, increments of £100, maximum application of £1,000,000

Applications with HL close 3:30pm Monday 19 May 2025

DRS1

rjmachin said:

DRS1 said:

Stupid question but what will it cost?

Can you get £1 nominal for £1?

From https://www.hl.co.uk/shares/ipos-and-new-issues/treasury-2056-gilt-launch:

Unlike new bond issues, you will not know the price (typically £100 per bond or £1 per unit) when making an application. The price will be negotiated between syndicate members and prospective investors on Tuesday 20 May. You will receive the new issue price which may be above £100 per gilt or £1 per unit

Minimum application of £1,000, increments of £100, maximum application of £1,000,000

Applications with HL close 3:30pm Monday 19 May 2025

Thanks.  I think I have seen somewhere that HL won't proceed with your application if the yield you would get is less than 4.1% (so that is some comfort)

FIREDreamer

DRS1 said:

Stupid question but what will it cost?

Can you get £1 nominal for £1?

Might be priced close to £1 par given current gross redemption yields on 30 year gilts.

poseidon1

DRS1 said:

Stupid question but what will it cost?

Can you get £1 nominal for £1?

It would be and with no commission payable.

However my concern given its long duration is the possibility of it either  opening at a discount to face value when trading commences or moving to a  future discount dependent on perception of the quality of UK sovereign debt going forward.

For contrast TG40 ( Treasury 4 3/8 % 2054) can currently be bought for around 84.54p which converts into a approximate running yield of 5.17% subject to any accrued income at date of purchase.

FIREDreamer

poseidon1 said:

DRS1 said:

Stupid question but what will it cost?

Can you get £1 nominal for £1?

It would be and with no commission payable.

However my concern given its long duration is the possibility of it either  opening at a discount to face value when trading commences or moving to a  future discount dependent on perception of the quality of UK sovereign debt going forward.

For contrast TG40 ( Treasury 4 3/8 % 2054) can currently be bought for around 84.54p which converts into a approximate running yield of 5.17% subject to any accrued income at date of purchase.

TG40 matures in 2040. A much shorter duration than that offered here. Also its current price is £93 per £100 nominal

The gilt maturing in 2054 is TR54 with a 1.625% coupon and currently priced at approximately £45 per £100 nominal (low coupon, higher capital gain at maturity).

Not sure which gilt you are looking at but it isnt either of these.

DRS1

poseidon1 said:

DRS1 said:

Stupid question but what will it cost?

Can you get £1 nominal for £1?

It would be and with no commission payable.

However my concern given its long duration is the possibility of it either  opening at a discount to face value when trading commences or moving to a  future discount dependent on perception of the quality of UK sovereign debt going forward.

For contrast TG40 ( Treasury 4 3/8 % 2054) can currently be bought for around 84.54p which converts into a approximate running yield of 5.17% subject to any accrued income at date of purchase.

Thank you.  That is much more informed than my worry that I will be dead before it matures.

You did have me worried by the TG40 reference - I thought I could rely on the numbers to represent the maturity year.  I think you mean T54 (same nominal yield as TG40 just lasts another 14 years although I am not sure as T54 has a yield of 5.55% but the price is right while TG40 is about 8p more expensive)