Gilt issue comes in early

A TOTAL of pounds 750m is on the way to investors who put their money into a gilt issue that the Government has decided to redeem.

The Government decided to unwind Treasury 9 per cent 1992/96 so that it could replace the funding with new issues paying a lower rate of interest. Last week there was a new issue at 8.5 per cent, and new stock at 8 per cent as well as index-linked issues paying 2.5 per cent above the inflation rate.

But should private investors take up the new issue?

Richard Briscoe, an economist at Midland Bank, believes the index-linked stock is a better bet. The two issues the Government increased this week are currently trading at well above the pounds 100 issue price.