gilts

Star bond fund manager Richard Hodges has warned the UK is likely to lose its coveted AAA-rating next year as the ongoing crisis takes its toll.

Mike Riddell, M&G's top performing bond fund manager, has urged investors to brace themselves for more pain in markets in the short term as the Greek crisis continues, with safe haven bonds set to see yields fall further.

'Full scale panic' is once again returning to markets following the Greek election, with safe haven bond yields - including gilts - likely to continue setting new record lows, said M&G's Ben Lord.

Yields on UK government debt are trading at an all-time low amid fresh panic in Europe, which has sent equity markets reeling.

Yields on UK debt were heading towards record lows in morning trading as worries over election results in Europe and news Spain may be forced to prop up its banking system spooked investors.

Threadneedle's Jim Cielinski said investors concerned about a jump in government bond yields should instead prepare themselves for a long period of financial repression.

QUANTITATIVE EASING

UK banks were making solid gains early this morning, lifting the wider FTSE 100 index, having been sold-off yesterday on eurozone fears.

THE BIG QUESTION

The government's plans to issue gilts with a maturity greater than 50 years, or even with a never-ending life, have been criticised as little more than a 'gimmick'.