The Treasury has launched a new gilt offering the equivalent of 5.375% interest until January 2056 but investors need to act quickly, says AJ Bell, as orders need to be made through the platform by 2.30pm today.

Wednesday 21 May will be the first day of trading and after that point there should be a secondary market in the gilt.

The first interest payment will be made on 31 July and the gilt will mature on 31 January 2056.

While the rate sounds attractive compared to other savings offerings, people should think carefully before investing, warned Dan Coatsworth, investment analyst at AJ Bell.

He said: “In the current market, 5.375% equivalent interest could have investors jumping for joy. A bank offering that rate on a cash savings account might have a long line of people queuing up to hand over their money.”

He pointed out that the rate is much higher than the current best-buy cash deals on the market for instant access and five-year fixed rate savings and it’s also more generous than the 3.3% prospective dividend yield on the FTSE 100.

But if interest rates go up, gilt yields could also move higher, Mr Coatsworth said. “That means future gilt issues could have a more attractive headline yield and investors might sell their existing gilts to buy the newer ones. That process could push down the price of existing gilts.”

He said that wouldn’t matter to anyone intending to hold a gilt until maturity, as they would be repaid the original face value of the government bond.

He warned that inflation also matters when weighing up gilts. “Gilt prices tend to fall when inflation rises by more than expected because investors tend to demand a higher yield to compensate for the erosion of the investment’s value and purchasing power.”

He added that some people might think they can easily make more than 5.375% a year through investing in the stock market. Mr Coatsworth said: “While that is true, investing in stocks and shares comes with much higher risks than investing in gilts.”