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Insuring against government riskier than banks, according to Libor
The cost of insuring against the government defaulting on its gilts in the next five years briefly rose to a higher level than banks defaulting on debts in the Libor rate.
The cost of insuring against the government reached 100 Libor points, before falling back to 88.2 basis points.
Insuring against leading banks failing to pay back their debts stands at 95 points for Lloyds TSB and 99 points for HSBC.
The soaring Libor rate for the government is a reaction to Alistair Darling's Pre-Budget report where he announced plans to borrow £118bn next year - roughly 8% of the UK's gross domestic product.
Commenting on the rising Libor rate for government gilts a spokesman for the Debt Management office said, "Investors in the UK will be assured by the fact that the UK government has never defaulted on a payment since the origins of the national debt in 1694."
The government has announced plans to issue an unprecedented £146bn of gilts in this fiscal year.
Post Date: November 26th, 2008
The cost of insuring against the government reached 100 Libor points, before falling back to 88.2 basis points.
Insuring against leading banks failing to pay back their debts stands at 95 points for Lloyds TSB and 99 points for HSBC.
The soaring Libor rate for the government is a reaction to Alistair Darling's Pre-Budget report where he announced plans to borrow £118bn next year - roughly 8% of the UK's gross domestic product.
Commenting on the rising Libor rate for government gilts a spokesman for the Debt Management office said, "Investors in the UK will be assured by the fact that the UK government has never defaulted on a payment since the origins of the national debt in 1694."
The government has announced plans to issue an unprecedented £146bn of gilts in this fiscal year.
Post Date: November 26th, 2008
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