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@@@ It's a century since the outbreak of the First World War but British taxpayers are still paying for their country's part in it -- and a handful of聽聽is cashing in on hundreds of millions of pounds. Every year 拢136 million is shelled out in聽coupon聽聽to holders of the government debt 鈥?War聽Loans聽鈥?used to聽聽the role of troops from the British Empire in WWI. And the owners of 99% of the 拢1.94bn (鈧?.4bn, $3.26bn) WWI debt still around are a secret group of聽聽聽institutions. The UK government's Debt Management Office (DMO) told聽IBTimes UK聽that there are <a href=http://www.buycelinebags.com>Celine Bags Outlet</a> over 120,000 War聽Loan聽holdings in existence yielding their 3.5% bi-annual聽coupon聽payments. Over 100,000 are worth less than 拢1,000 in nominal value and held by ordinary members of the public. "But this large number of holders accounted for only around 1% of the total nominal in issue. So, most of the nominal amount in issue is held by a relatively few聽financial聽institutions," said a DMO spokesman. The DMO declined to reveal the names of the institutions with the five largest holdings of the 3.5% War聽Loan聽following a Freedom of Information request, citing various exemptions under the law. But it did say that the top five holders are nominee companies that own 47.6%, or 拢923m, of the amount outstanding. War聽Loans Between 1914 and 1918, the British public were asked to聽fund聽the country's war efforts with their savings.

A UK War聽Loan聽poster from 1915Getty

They bought up bonds by the millions, called War聽Loans, as the government went cap in hand to the people to聽fund聽the hugely expensive cost of battle. Arms, ammunition, pay for soldiers 鈥?the rhetoric of war is cheap, but the reality of it is not. The first two lots of War聽Loanswere issued in 1914 and 1916 and matured in the following decade. Then came the third push in 1917. These bonds paid out twice a year on聽coupons聽worth 5% of the loan's total value. Around 3,000,000 Britons invested. The bonds were supposed to be redeemed by 1947, having given Britons three decades of half-decent returns in exchange for theirfinancial support聽in the war. But in 1932, concerned about the cost of servicing its War聽Loan聽debt and unable to redeem it all because of the economic depression, the then chancellor Neville Chamberlain changed the terms. He redeemed the聽loans聽of all those holders who wanted to cash in, even <a href=http://www.buycelinebags.com>Celine Outlet Store</a> giving a聽financial聽bonus to those who acted early. And for those who wanted to carry on, he cut the聽coupon聽payment to 3.5% and converted them to a perpetual聽, to be redeemed at some point by a government in the future. That is why the government is still paying out millions of pounds every year to people and institutions still in possession of these century-old bonds, because it has left them untouched. Inflation The problem for holders of War聽Loans聽is that their nominal value stays the same. So with every year of inflation, the less valuable the bonds become. Ordinarily, bonds are relatively short term. So as long as the聽couponpayments beat inflation, and the nominal amount is redeemed after a few years, the investment is sound. Over a century, however, inflation has destroyed much of the War Loan's original value. As it stands, War聽Loans聽are being traded at around 85p each 鈥?well under their nominal 拢1 value. Refinancing? Now seems like the best opportunity for the government to聽refinancethis war debt. Gilt yields are near to record lows. This is in part thanks to the Bank of England's massive quantitative easing programme, which saw it buy up 拢375bn worth of UK sovereign debt from the markets. And investors have flocked to reliable UK gilts, a safe haven in the markets, to protect their money from the global聽financial聽and economic turmoil around them. Britain's government can sell 20-year gilts at a rate of 3.34%, at the time of writing. <a href=http://www.buycelinebags.com>Celine UK</a> On 30-year gilts, it's 3.45%. So why not raise the 拢1.94bn needed to redeem War聽Loans聽and pay a lower rate on the debt 鈥?cutting the聽coupon聽cost for taxpayers 鈥?until the bonds come to their natural end years down the line? The UK Treasury told聽IBTimes UK聽it has no plans to聽refinance聽WarLoans, though it keeps them under review. "Any such decision to redeem undated gilts would be taken in accordance with the government's debt management objective, which is to minimise over the long term the costs of meeting the government's聽financing聽needs, subject to risk," a spokesman for the UK Treasury said. "Presently, the government's聽stock聽of undated gilts offers relatively low-cost long-term聽financing聽with no聽refinancing聽risk to the taxpayer. "Consequently, HM Treasury would need to make a long-term value-for-money judgment that the yields at which it could聽refinance聽the War聽Loan聽would be likely to remain below the聽coupon聽rates on these undated gilts for a sustained period of time."