Gilts: Difference between revisions

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


Historically, gilts were printed on gilt-edged paper.
 
 
:<span style="color:#4B0082">'''''Example: Short-dated Conventional gilt'''''</span>
 
:UK gilt is the 2% Treasury Gilt 2020 in denominations of £100.
 
:Each £100 gilt repays £100 to the owner on 22 July 2020.
 
:It will also pay interest on 22 July 2020, calculated at 2% per year. It was originally issued in 2014.
 
:It pays a predetermined fixed amount of interest (2% per year) throughout its whole life.
 
:It will be repaid at a fixed amount of £100 at its maturity on 22 July 2020.
 
:Whatever happens to inflation in the meantime, these amounts will not change.
 
 
:<span style="color:#4B0082">'''''Example: Long-dated Conventional gilt'''''</span>
 
:A very long dated conventional gilt is the 4% Treasury Gilt 2060.
 
:It will pay interest at 4% per year for the next 40 years.
 
 
:<span style="color:#4B0082">'''''Example: Index-linked gilts'''''</span>
 
: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 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 a sense of confidence.''




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* [[G+]]
* [[G+]]
* [[ILG]]
* [[ILG]]
* [[Index-linked gilt]]
* [[Paper]]
* [[Paper]]
* [[Risk-free rate of return]]
* [[Risk-free rate of return]]

Revision as of 15:42, 20 May 2020

1.

Most commonly, UK central government debt.


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


Example: Short-dated Conventional gilt
UK gilt is the 2% Treasury Gilt 2020 in denominations of £100.
Each £100 gilt repays £100 to the owner on 22 July 2020.
It will also pay interest on 22 July 2020, calculated at 2% per year. It was originally issued in 2014.
It pays a predetermined fixed amount of interest (2% per year) throughout its whole life.
It will be repaid at a fixed amount of £100 at its maturity on 22 July 2020.
Whatever happens to inflation in the meantime, these amounts will not change.


Example: Long-dated Conventional gilt
A very long dated conventional gilt is the 4% Treasury Gilt 2060.
It will pay interest at 4% per year for the next 40 years.


Example: 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 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 a sense of confidence.


2.

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


See also