Budget Impact

From what I have read, the rule that you can only put in your ISA those bonds that have five years to run has now been abandoned and short dated bonds (and bond funds) can now be held.

If you put this together with a higher ISA allowance, it may encourage more to put money into the ORB market and over time be a push up for prices!

Anybody noticed anything else relevant to bonds?


  • The removal of the obligation to purchase annuities must be a positive for bonds as well as equities. With a significant shift towards income drawdown, many people will continue to invest through their retirement.
  • Interesting to speculate. The yield map suggests a solid borrower might get people's attention with a 3 year bond offering something like 3.25% - basically somewhere to park ISAs ready to reinvest when rates are likely to be higher in 2017 while still earning more than cash on deposit. The attraction for the buyer would be avoiding the transaction fees, spread etc they would be hit with buying second hand.

    This would in theory be a lot cheaper for the borrower than longer term offerings, but the problem would presumably be justifying the issue costs/admin for a retail bond over such a short duration. My guess is that economies of scale mean it would only be worthwhile for a big player.

    Any thoughts?
  • The new 4% 3 year pensioners bonds will be useful for the pensioners who want to play this theme.
  • Interestingly, Robert Peston (BBC) has stated that the majority of annuities are invested in bonds. If a significant number of people withdraw cash, or invest in equities on their own under the new rules, it could dry up credit for the larger companies who would have to go the banks (or - my speculation - even maybe the ORB market)
  • shotgun,
    Yes, I thought that....until I discovered they're limited to £10k!
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