(Bloomberg) – Investors are preparing for a flood of retail money to invite the gilded market after redemption of the British bond that has become popular among the rich British who wanted to reduce the tax account.
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The 36 billion pound bond ($ 45 billion) matures on Friday has an unusually low coupon and has offered greater effective refunds than savings accounts for rich private investors, thanks to Quirk in British Tax Policy. He became the most sought after gilded for retailers.
Investors are likely to transfer most of the redeemed money to other low -cost maturation that mature in the coming years, according to the RBC Capital Markets strategy, including Megum Muhic. Two such securities that mature in 2026. Both rose on Thursday ahead of the redemption.
“A lot of money will be deposited in user accounts and it could be looking for a new home,” Benstead himself, a fixed -in -teaching revenue in the Interactive investor, an investment platform with more than 70 billion pounds of assets under the administration. “Time is good for investors who want to re -invest this money in short -term ribbons, as yields have increased from summer.”
The gilded in question was first sold in the middle of 2021 when the Great Britain’s economy was recovering from the Pandemia of the Koronavirus, the key rate of the Bank of England was at a record low 0.1%, and the prospect of meaningful splashing of monetary monetary monetary was removed. This means that his semi -annual coupon, which sets the State Duty Management Office in accordance with market yields at the time of issue, is only 0.25%.
Low -co -co -production papers are attracted to retail investors because, while GILTS are exempt from capital gain tax, income tax still reaches the coupon revenue. This means that the owners can earn greater refunds exempt from taxes because they gravitate to their redeemed value compared to peers with higher cowpons.
“These gains can be significant with regard to the distance from the couple that some of these bonds traded,” said Moyeen Islam, a strategist rates at Barclays Plc. 2025. Gilded maturation on Friday published on 100 pencils in June 2021. He slid under 90 Pence in 2022, before returning to his purchase value.
“Anecdotic evidence suggests that retail stakes for some bonds can be surprisingly high, and a recent sale has recorded a strong demand for investors in retail,” Islam added.
Low coupons also offer to use institutional investors due to greater sensitivity to interest rates, allowing funds managers to adjust more effectively to the risk of portfolio. At the annual DMO consultation last week, there were invitations to some market participants due to larger supply of securities with low-cow cow.
