Britain borrows at record-low rate for 30 years

FILE PHOTO: People wearing masks walk past the Bank of England, as the spread of the coronavirus disease (COVID-19) continues, in London, Britain, March 23, 2020. REUTERS/Toby Melville

LONDON (Reuters) - Britain’s government paid investors an interest rate of under 0.5% to borrow for more than 30 years on Wednesday, the lowest-ever yield at an auction for a conventional British government bond with a maturity of more than 10 years.

Investors bid for 2.6 times the 1.75 billion pounds on offer of the 1.625% 2054 gilt, similar to the last sale of the bond on April 21, and the average successful bidder will receive an annual yield of 0.495%.

In March the Bank of England cut its main interest rate to a record low 0.1%, and announced a record 200 billion pounds in extra bond purchases that has kept a firm lid on bond yields and government borrowing costs.

Since then Britain has massively stepped up its borrowing plans to fund government efforts to lessen the impact of the coronavirus, but its cost of borrowing has fallen, not risen.

The lowest-ever yield at a conventional gilt auction came at a sale of 3.25 billion pounds of five-year gilts on Tuesday, when the average bidder received a yield of 0.017%.

Reporting by David Milliken; Editing by William Schomberg