UK raised 7 billion pounds for a 50-year bond while running extreme deficits and quantitative easing. Am I missing something? The yield is 2 bps less than the 2055 issue. The market was expected that the issuance would be between 3-5 billion ponds not the $11.6 billion raised. The bond will have a 4% coupon.
So much for inflation and deficit uncertainty. You would expect that an inflation prone monetary policy focused on easing and large fiscal deficits, investors would avoid this type of bond, yet the syndicated deal saw strong interest.
Bloomberg has noted that Ireland and Finland issued 15-year bonds for the first time and there is more interest in longer-dated issuance. While this is great for the issuer, it is out of the comfort zone of fixed income buyers. A simple explanation is that there is a strong shift away from equities and investors want the long duration paper as a substitute. My view is that investors will not be rewarded for this risk taking.
So much for inflation and deficit uncertainty. You would expect that an inflation prone monetary policy focused on easing and large fiscal deficits, investors would avoid this type of bond, yet the syndicated deal saw strong interest.
Bloomberg has noted that Ireland and Finland issued 15-year bonds for the first time and there is more interest in longer-dated issuance. While this is great for the issuer, it is out of the comfort zone of fixed income buyers. A simple explanation is that there is a strong shift away from equities and investors want the long duration paper as a substitute. My view is that investors will not be rewarded for this risk taking.
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