Chancellor George Osborne aims to launch a Government bond with a repayment date lasting 100 years or more to take advantage of historically low interest rates.
In next week’s Budget, Osborne is expected to announce plans for the Debt Management Office to test market appetite for the “super-long gilts”.
According to reports, the Chancellor also wants to test the case for launching “perpetuals”, bonds that pay interest indefinitely, with the principal never being repaid.
Speaking to the BBC, Treasury officials described the 100-year bonds as like the country taking out a low rate fixed-term mortgage .
The official told the BBC the move could save the country £20bn in debt interest over the next five years.
The last time such a long-dated bond launched was in 1932. It was known as the “war bond” and was issued to pay for the costs of the First World War with a yield of 3.8 per cent.