Consols

Consols

Consols (originally short for consolidated annuities, but can now be taken to mean consolidated stock) are a form of British government bond (gilt), dating originally from the 18th century. Consols are considered one of the rare examples of an actual perpetuity, although they may be redeemed by the issuer.

In 1752, the Chancellor of the Exchequer and Prime Minister Sir Henry Pelham converted all outstanding issues of redeemable government stock into one bond, Consolidated 3.5% Annuities, in order to reduce the coupon rate paid on the government debt.

In 1757, the coupon rate on the stock was reduced to 3%, leaving the stock as Consolidated 3% Annuities. The coupon rate remained at 3% until 1888. In 1888, the Chancellor of the Exchequer, George Joachim Goschen, converted the existing Consolidated 3% Annuities, along with Reduced 3% Annuities (issued in 1752) and New 3% Annuities (1855), into a new bond, 2¾% Consolidated Stock under the National Debt (Conversion) Act 1888 (Goschen’s Conversion). As part of the terms of the Act, the coupon rate of the stock was reduced to 2½% in 1903, and the stock given a first redemption date of 5 April 1923, after which point the stock could be redeemed at par value by Act of Parliament.

Consols still exist today: in their current form as 2½% Consolidated Stock (1923 or after), they remain a small part of the UK Government’s debt portfolio. As the bond has a low coupon, there is little incentive for the government to redeem it. Unlike most gilts, which pay coupons semi-annually, because of its age Consols pay coupons four times a year. Also, as a result of its uncertain redemption date, they are typically treated as a perpetual bond.

Given their long life, references to Consols can be found in many places, including literature (such as David Copperfield by Charles Dickens, Howards End by E. M. Forster, Vanity Fair by William Makepeace Thackeray and The Forsyte Saga by John Galsworthy) and in economics.


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Synonyms:
(of the English Government)


Look at other dictionaries:

  • Consols — Consols, englische Staatspapiere. Diese 3% C. (Consolidirte Annuitäten, Three per cent consols, od. Consolidated annuities) bilden den Haupttheil der englischen Staatsschuld u. sind die an der Londoner Börse am häufigsten vorkommenden Effecten,… …   Pierer's Universal-Lexikon

  • Consols — Con sols (? or ?; 277), n. pl. [A contraction of consolidated (annuities).] The leading British funded government security. [1913 Webster] Note: A considerable part of the public debt of Great Britian, which had been contracted in the form of… …   The Collaborative International Dictionary of English

  • Consols — (engl.), s. Konsols …   Meyers Großes Konversations-Lexikon

  • Consols —   [kən sɔlz, englisch], Konsols [kən sɔlz], Singular Consọl der, s, Kurzwort für Consolidated stocks [kən sɔlɪdeɪtɪd stɔks], Typ von langfristigen Staatsanleihen, deren Ausgabe der Umwandlung (Konsolidierung) kurzfristiger in langfristige… …   Universal-Lexikon

  • consols — (izg. kȍnsols) m DEFINICIJA bank. konsolidirane obveznice; izdaju se prilikom konverzije starih zajmova u jedan novi ETIMOLOGIJA engl …   Hrvatski jezični portal

  • consols — [kän′sälz΄, kən sälz′] pl.n. [< consolidated annuities] British government securities, esp. those established in 1751 by the consolidation of nine loans …   English World dictionary

  • consols — See consolidated stock. Dresdner Kleinwort Wasserstein financial glossary Consols are British bonds that have no specified maturity date and pay a coupon forever. London Stock Exchange Glossary * * * Consols Con‧sols [ˈkɒnsɒlz, kənˈsɒlz ǁ… …   Financial and business terms

  • consols — n.pl. British government securities without redemption date and with fixed annual interest. Etymology: abbr. of consolidated annuities * * * plural of consol * * * /kon solz, keuhn solz /, n.pl. Sometimes, consol. the funded government securities …   Useful english dictionary

  • consols — /kon solz, keuhn solz /, n.pl. Sometimes, consol. the funded government securities of Great Britain that originated in the consolidation in 1751 of various public securities, chiefly in the form of annuities, into a single debt issue without… …   Universalium

  • CONSOLS —    the Consolidated Fund, loans to Government made at different times and at different rates of interest, consolidated for convenience into one common loan, bearing interest at 3 per cent., reduced in 1830 to 2¾, and in 1893 to 2½ …   The Nuttall Encyclopaedia

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