Some island residents could well be wearing broad smiles next week as the UK government redeems the long standing National War Bond.
The UK government announced late last year that it is to repay the nation’s remaining £1.9bn first world war debts.
The UK Treasury will redeem the war loan bond, which pays 3.5 per cent interest, next Monday (March 9)
Issued in 1932 by chancellor Neville Chamberlain to refinance debts run up during the war, the 3.5 per cent bond replaced a gilt issued in 1917 under the slogan: ‘unlike the soldier, the investor runs no risk’.
Donald Beggs, senior dealer at established Athol Street stockbrokers Ramsey Crookall told Business News : ‘Irrespective of the size of the amount holders will receive in March, we would be delighted to discuss reinvestments with each investor, who may find it difficult to replace this income flow’.
Mr Beggs said it was impossible to put a figure on the number of people in the island who will have held the bonds.
He said some investors have already approached the firm for assistance but he is certain there will be others who might not be fully aware of what is happening.
He said: ‘The whole idea behind War Loan issuance was for governments to finance military operations and other closely associated expenditures in times of war, although, it also removes money from circulation and thus helps to control inflation.
‘One famous and very effective poster advertising War Loan prompted citizens to “Turn your silver into bullets” and purchase War Loan at the local Post Office.
‘With no fixed maturity date this bond is classified as a perpetual, with the Treasury having the right to “Call” (redeem) the bond at any time.
‘In its life time, it has traded at a wide range of levels, being as low as £31 for every GBP £100 Nominal in 1990.
‘Up until recently to call the issue would have been uneconomical, however, with recent ultra-long gilt yields hitting record lows the Treasury can redeem the War Loan and reissue long dated gilts at a lower level, saving the taxpayer money!
‘And so, on March 9 the 3.5 per cent War Loan will be no more, there will be a whole host of holders looking to reinvest the proceeds.
‘Many island residents along with worldwide investors / corporations will have owned the War Loan through the decades, with a recent DMO (Debt Management Office) calculation suggesting that there are currently over 120,000 holdings in existence, which contribute to an annual coupon payment of £136 million from the government.’
Mr Beggs said Ramsey Crookall is celebrating its 70th anniversary next year and will be pleased to offer help and assistance.
The firm can be contacted on 623884 or dealers@ramseycrookall.com