The U.K. government's long awaited 50-year bond didn't ripple the swaps market on launch last Thursday. Dealers were using 30-year swap spreads as a reference point for future 50-year swaps, but these remained stable at 25 basis points, where they have been for several months. Traders said there was limited interest from either payers or receivers of 50-year swaps.
Meyrick Chapman, derivatives strategist at UBS in London, said the lack of movement in swaps also suggested there's not going to be a lot of trading around the 50-year mark. "There's likely to be intermittent interest," he noted, explaining this has been seen in other European countries with 50-year bonds. If U.K. corporates start looking to match the government's issuance program they would likely hedge at this maturity, according to Chapman. But, one dealer noted a coupon of about 5% for such long-dated bonds is not compelling enough for corporates to issue out to 50 years.