U.K. government bonds climbed, outperforming their “AAA” rated German peers in the first day of trading after Moody’s Investors Service cut Britain’s top rank, as investors downplayed the significance of the downgrade.

“What Moody’s said is old news,” said Stuart Thomson, who helps oversee $109 billion at Ignis Asset Management in Glasgow, Scotland. “It is behind the curve.”

Gilts rose Monday, reducing the additional yield investors demand to hold Britain’s 10-year benchmark securities instead of German bunds by two basis points, or 0.02 percentage point, to 52 basis points. Credit-default swaps on U.K. government debt fell one basis point to 48 basis points, according to data compiled by Bloomberg.

The downgrade of the U.K. to “Aa1” sparked a round of political sparring after Chancellor of the Exchequer George Osborne repeatedly referred to retaining the top rating as a test for his economic policy. At the same time, bondholders and economists said rating cuts are a poor indicator of fiscal health. U.S. and French yields are lower than they were when rating companies first downgraded the nations in the past two years.

“The impact on gilts will be limited in the same way ratings downgrades had limited impact on the United States and France,” said Shahid Ikram, head of sovereigns at Aviva Investors, which has the equivalent of $414 billion under management. “For us at Aviva, a more important factor to watch for gilts is the Bank of England’s bond-buying policy.”

Yields on sovereign securities moved in the opposite direction from what ratings suggested in 53 percent of 32 upgrades, downgrades and changes in credit outlook last year, according to data compiled by Bloomberg published in December. That’s worse than the longer-term average of 47 percent, based on more than 300 changes since 1974. 

(Bloomberg)