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Government paves the way for super-long gilts

The Government has given the green light on the issuance of gilts with maturities in excess of 50 years.

In the last Budget, Chancellor George Osborne announced plans for the Debt Management Office to test market appetite for the “super-long gilts”.

Following the consultation, the Government says issuance of these super-long gilts could represent cost-effective financing for the exchequer.

The Government will remove the current maturity cap on gilt issuance which was set at approximately 50 years and anticipates that in 2013/14 the Debt Management Office will look to launch new issuance in the 50 to 60-year range, subject to demand and market conditions.

Yellowtail Financial Planning managing director Dennis Hall says: “It will not be a great success or raise as much money as the Government hopes. The longer the period of the gilt the greater the uncertainty so investors will see it as high risk. We would not buy such long-term gilts.”

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