Remembrance of Bonds Past: 8% Coupons, Real Inflation and No QE
- Maturing U.K. gilt issued in 1996 is legacy of a bygone era
- Low-rate regime has dominated the market in recent years
Photographer: Richard Baker/In Pictures/Getty Images
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Jim Leaviss is lamenting an unusual loss at work. Not the retirement of a colleague, but a bond that’s tracked his career through booms and recessions, economic upheavals and a paradigm shift in government debt markets.
The U.K. gilt -- which matured this month -- was issued in 1996 with an 8% semi-annual coupon. Leaviss worked at the Bank of England at the time, and departed to manage bond funds for M&G Investments in 1997, going straight from the institution issuing the gilt to one buying it.