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simply taking the yield from the bonds they already held (the value of which would have increased
The problem (or one of them anyway) was that the value of existing gilts decreased, I think?
ChasnotRobert-
There's the tradable value of the bond, and the yield provided to the bond holder from government. The yield went up, and the tradable value went down due to the market being flooded with bonds.
So if they weren't engaging in funny business with derivatives, they'd have been given more free money from government (for index-linked bonds, at least). But they had to sell them at a reduced price in order to pay their creditors.
The whole thing is bizarre, frankly.
slippers
This is a good listen, thanks for posting!