Uk credit rating

[severncity]

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Gilt yields have fallen since Friday, meaning that it is cheaper for the UK government to borrow.

http://www.ft.com/cms/s/0/6286ad2a-3...#axzz4CsZkXZp0

From the FT link:

"British government borrowing costs fell below 1 per cent for the first time in history on Monday as the aftershock of last week’s decision to exit the EU spurred investors towards gilts.

"In spite of warnings that the UK faces a credit rating downgrade as the result of the referendum, gilts have retained their status as a haven from market turmoil, helping the bonds to trade at record-low interest rates."

[az city]

Two partially countervailing effects are at work. Investors are heading for govt. bonds for their security (cf. the rise in gold) which means their price is rising causing their yield to fall (the interest rate). OTOH downgrading means they are considered potentially less secure. At the moment I think the first effect dominates while large holdings of sterling await an exchange rate recovery. In the LR the latter will dominate.