The government has said it will not issue CPI-linked gilts in 2012-13, saying the move would not be cost effective and would involve "a number of risks".
The decision follows a consultation by the UK Debt Management Office over the possibility of CPI-linked issuance, which closed on 22 September, with many pension funds viewing CPI-linked gilts as a natural way to hedge CPI-linked liabilities. But the DMO said the majority of respondents felt it unlikely that investors would be prepared to pay a premium for CPI-linked gilts over RPI-linked issuance at the current time. The Treasury said the consultation highlighted uncertainties around issues such as the depth and sustainability of demand for CPI-linked gilts and potential illiquidity ...
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