NS&I Index linked bonds change

wriggly

NS&I have issued new index-linked bonds
3-year 17th issue RPI+0.70%
5-year 44th issue RPI+0.70%

Maybe they need money now to pay for the 10p tax write-off.

Biggles

That's remarkably soon after issues 16 & 43.

Most likely explanation is that they found no-one was willing to invest at +0.25% & +0.35%, and are trying to find a level that will attract investment.

amcluesent

Could be that now the BoE are seen to be keeping interest rates high, Treasury think that RPI won't explode to > 10% and can 'risk' a very slightly better premium to RPI to get the cash coming in again.

nrsql

Tempting again.
Bet those that took the last one are feeling a bit sick.

I was thiking about it - just wondering how long until the next issue.

1st year is RPI + .55%, issue before last was RPI + 1.1%
against 4.75% against 5.3% tax free,
5.94% v 6.63% for basic rate tax.

nicko33

nrsql wrote: »

Tempting again.
Bet those that took the last one are feeling a bit sick.

For those that did take the previous ones, it may be worth cashing them in and buying these new ones.
I think the extra interest on these would make up for the interest lost by cashing in early.

edit: some rough calculations for the 3 year based on a fixed RPI at 4.2%
cash in after 1 month and move to new issue - lose £54.52 on old, but gain £221.88 on new

slogan7

I've got a question about when the RPI is calculated which I can't find the answer for on the NS&I website.

Is the RPI fixed at the beginning, the end or does it track over the 3 or 5 years ?
As an example if RPI is 2% at the start and rises 1% per year for 3 years, how would the RPI be calculated ?

Thanks

Biggles

slogan7 wrote: »

I've got a question about when the RPI is calculated which I can't find the answer for on the NS&I website.

Is the RPI fixed at the beginning, the end or does it track over the 3 or 5 years ?
As an example if RPI is 2% at the start and rises 1% per year for 3 years, how would the RPI be calculated ?

The RPI is an index, not a percentage, eg 210.5, not 2.3%.

Finishing RPI divided by starting RPI = your index-linking increase.
http://www.nsandi.com/products/ilsc/tandc.jsp

whu

Biggles
Does that mean if the finishing RPI was 215 and the starting one was 210 you would get 1.02 plus 0.55 for the first 12 months?I thought you got the average of the RPI for the first 12 months plus 0.55% ie if average was 4 you would get 0.55% plus 4- am I wrong?

martinman3

whu wrote: »

Biggles
Does that mean if the finishing RPI was 215 and the starting one was 210 you would get 1.02 plus 0.55 for the first 12 months?I thought you got the average of the RPI for the first 12 months plus 0.55% ie if average was 4 you would get 0.55% plus 4- am I wrong?

Starting at 210, finishing at 215 gives 100 x (215-210)/210 = 2.38% + 0.55% for 3 year (+0.45% for 5 year)

The RPI values at purchase (or anniversary of purchase) and 12 months later (or month of cash-in) are used each year

nicko33

looks like NS&I have issued new Index-Linked Savings Certificates - again
3-year 18th issue RPI+1.00%
5-year 45th issue RPI+1.00%

isofa

Still not as good as the RPI+1.35% issues (15 and 42) available last year...