Tag Archives: crise da dívida soberana

a 100 anos

Sim, parece estranho.

O Ministro das Finanças inglês anunciou que o país irá emitir títulos de dívida a 100 anos esta semana.

Esta emissão é explicável pela altamente endividada inglaterra. 1,2 trillion pounds é o valor actual da dívida pública inglesa.

Leio aqui:

“The UK considers issuing a 100 year Gilt (government bond)

This idea was first floated before Christmas and has gained ground overnight. As ever the mainstream media has handled it badly with phrases like “debt for generations”. As it does not change the amount of debt we have or the time period we intend to have it for this is utter rubbish as we would have been borrowing in one form or another anyway.

The actual position requires a little more nuance. For the UK taxpayer it is an excellent idea as it locks in low borrowing costs. As someone who has worked through periods where we have had to pay 15% on our longer-dated debt then current 3% and a bit seems very low and for the issuer that is good. Also it helps to avoid crunches in difficult economic times where debt needs rolling over and we have seen this affect Greece this month with the deadline for her March 20th bond approaching with little cash to pay it without another bailout. Debt management is a UK strength and this would improve it.

The other side of the coin is buyers and here is the problem, who would buy it? To buy at such levels for such a long time you either have a very pessimistic view of the UK economic outlook probably combined with a very optimistic outlook on UK inflation, or you do not know what you are doing! Oh and the problem with an economic view that pessimistic is will there be any money to pay you in 100 years time? The current economic outlook which I discussed only on Monday looks rather stagflationary and that is a long way from the best outlook for a fixed coupon bond holder.

Will the Bank of England buy it?

Under its current strategy of buying longer dated gilts such as our 2060 stock the answer is yes I think. There are thresholds to cover off such as it will not buy for a week after issue and it only buys Gilts with more than £4 billion in issue. If you want the day it will probably be Tuesdays as it tends to buy the longest dated stock then. Mind you perhaps we should be looking at the Bank of England’s balance sheet too as UK Gilt yields are following American ones upwards with our ten-year yield now at 2.27%. Losses on a 2112 maturity bond will take a lot of hiding for a very long time, does Mervyn King have a son or daughter ready to step into the fold? Oh and do they have any kids as well?”

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