Britain is likely to issue its first 50-year inflation index-linked bond later this year.
The issue, most likely in July or September, would follow the first sale of 50-year conventional gilts since 1960 on May 26th, as governments across Europe try to lock in low borrowing costs and take advantage of demand from pension and insurance funds.
Barclays Capital strategist Michael Oman
Britain's debt management office (DMO) said July 26th and September 22nd had been set aside for index-linked auctions. "It's very possible that one of those dates could see a 50-year index-linked auction," said a spokesman.
Index-linked securities offer protection against inflation, which undermines the real rate of return of long-dated assets.
In Britain, inflation-protected paper is linked to the Retail Price Index.
Analysts expect strong investor interest. "There's potentially considerable demand for long-dated inflation-linked gilts from the pension sector which has an explicit liability to inflation . . . and the DMO knows this," said Mr Michael Oman, strategist at Barclays Capital.
"We've been expecting an auction of a 50-year index-linked gilts in July for some time now," he said.
Structural changes in pension regulations across Europe, including new rules on covering unfunded pension liabilities, and falling mortality rates due to advances in medical sciences are driving pension fund demand for long-dated bonds.
The DMO plans to issue a total of £53.5 billion of bonds in this fiscal year on behalf of the government.