Bond issues withdrawn after surge in demand

Published:

NATIONAL Savings and Investments (NS&I) has pulled its market-leading bond less than a month after it was launched.

The government-backed group has withdrawn its one and two-year Guaranteed Growth and Guaranteed Income Bonds following strong consumer demand for the products.

The deals were launched on October 29, with interest of 3.95% offered on the one-year Guaranteed Growth Bond, putting it at the top of the best buy tables.

The rates paid on the other deals were also among the most competitive on offer.

John Prout, director of customer sales and retention at NS&I, said: “We always forecast a likely sales volume for our savings products, however due to the popularity of the one and two-year issues, we have achieved our sales target more quickly than anticipated. We have therefore taken these issues off sale.”

The group is continuing to offer its three and five-year issues of Guaranteed Growth Bonds, which are paying interest of 4.4% and 4.6% respectively at the end of the investment term.

It also has three and five-year Guaranteed Income Bonds, which offer returns of 4.3% and 4.5% respectively, paid on a monthly basis.

Demand for fixed-rate bonds has soared since the Bank of England base rate began to fall sharply, as savers scramble to earn a decent return on their cash.

Subscribed

Research released by financial information group Moneyfacts.co.uk earlier this week showed the products are becoming fully subscribed after an average of just 23 days, a fraction of the 158 days that the average fixed-rate bond was available for in March 2006.

The average rate paid on a fixed-rate bond was 2.73% at the end of October, compared with average returns of just 0.17% on branch-based instant access accounts and 0.4% on tax-free Isas, as banks and building societies reward savers for locking up their money for a set period of time.