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United Kingdom to redeem £218 million of First World War bonds
By Marisa Wong
Madison, Wis., Oct. 31 – The United Kingdom will pay off part of its First World War debt, according to an announcement by George Osborne, Chancellor of the Exchequer.
The debt repayment is part of the government’s efforts to redeem bonds dated as far back as the 18th century, according to a press release.
The U.K. Treasury will redeem on Feb. 1 £218 million of debt from the 4% consolidated loan first issued by then chancellor Winston Churchill in 1927 partly to refinance national war bonds originating from the First World War.
The U.K.’s debt management office estimates that the nation has paid £1.26 billion in total interest on these bonds since 1927.
These national war bonds were first issued in 1917 as part of an unprecedented effort by the government to raise money to finance the ongoing cost of the war, which started with the first issue of the first war loan in November 1914. At the time, the bonds paid out an attractive rate of interest of 5%, the release said.
Friday’s announcement is the first repayment of an undated gilt of this sort by any chancellor in 67 years.
Around £2 billion of First World War debt remains. The government said it is looking into the practicalities and value for money of repaying this outstanding debt in full.
The government said it is only able to refinance this borrowing today because interest rates are lower.
There are currently 11,200 registered holders of the bonds. Of that, 7,700 investors hold less than £1,000 principal amount, and 92% of holders own less than £10,000 each.
This is one of eight undated government bonds currently outstanding.
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