Gilts

1.

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.

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

See also