Britain will announce plans next week to flood the market with government bonds again, analysts predicted today.
Chancellor of the Exchequer Gordon Brown will present his ninth annual budget on Wednesday, less than two months before a probable general election, against a backdrop of much higher government borrowing in recent years.
Issuing long term bonds has returned to fashion recently as pension funds hoover up long-dated assets to match increasingly long liabilities.
The British bond issuing authority consulted investors a few months ago on the possibility of issuing 40-50 year gilts to fund the government budget shortfall and to meet strong demand from the pension and insurance industry.
Some analysts estimate new supply of gilts with maturities longer than 15 years could rise to more than 50 per cent of next year's total issuance.
Traders said the market is also wondering if the new ultralong paper will be distributed through auctions or syndicated sales.
Britain last issued 50-year bonds in October 1960 with double-dated maturities of 2008-2012, but they are not actively traded.