Gilts: Difference between revisions

Revision as of 23:33, 24 April 2024

1. Financial markets - financial instruments - UK central government debt.

Most commonly in UK usage, UK central government debt.

Also known as Gilt-edged securities, or Gilt-edged stock.

Example 1: Short-dated Conventional gilt

An example of a short-dated conventional UK gilt was the 2% Treasury Gilt 2020.

Each £100 gilt repaid £100 to the owner on 22 July 2020.

It also paid interest on 22 July 2020, calculated at 2% per year. It was originally issued in 2014.

It paid a predetermined fixed amount of interest (2% per year) throughout its whole life.

It was repaid at a fixed amount of £100 at its maturity on 22 July 2020.

Whatever happened to inflation before final maturity, these amounts did not change.

Example 2: Long-dated Conventional gilt

A very long dated conventional gilt is the 4% Treasury Gilt 2060.

It will pay interest at 4% per year until 2060.

Example 3: Index-linked gilts

Index-linked gilts pay out larger amounts, the higher the rate of inflation.

The 'index' they are linked to is the UK Retail Prices Index (RPI).

About 25% of UK gilts are index-linked, with 75% being conventional.

Historically, gilts were printed on gilt-edged paper (heavy bond paper with a metallic edge, usually gold-leaf or gold paint).

The heavy expensive looking paper was designed to give confidence in the promise.

2. Financial markets - central government debt.

The term 'gilt' is also used to refer to the debt of certain other central governments, especially US government treasury securities.

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 * [[Exempt gain]]
 * [[G+]]
+* [[Gilts crisis]]
 * [[High-yield]]
 * [[Index-linked gilt]]