Gilts: Difference between revisions
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imported>Doug Williamson (Add three examples of different types of gilts.) |
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1. | 1. ''Financial markets - financial instruments - UK central government debt.'' | ||
Most commonly, UK central government debt. | Most commonly in UK usage, UK central government debt. | ||
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:<span style="color:#4B0082">'''''Example: Short-dated Conventional gilt'''''</span> | :<span style="color:#4B0082">'''''Example 1: Short-dated Conventional gilt'''''</span> | ||
:UK gilt | :An example of a short-dated conventional UK gilt was the 2% Treasury Gilt 2020. | ||
:Each £100 gilt | :Each £100 gilt repaid £100 to the owner on 22 July 2020. | ||
:It | :It also paid interest on 22 July 2020, calculated at 2% per year. It was originally issued in 2014. | ||
:It | :It paid a predetermined fixed amount of interest (2% per year) throughout its whole life. | ||
:It | :It was repaid at a fixed amount of £100 at its maturity on 22 July 2020. | ||
:Whatever | :Whatever happened to inflation before final maturity, these amounts did not change. | ||
:<span style="color:#4B0082">'''''Example: Long-dated Conventional gilt'''''</span> | :<span style="color:#4B0082">'''''Example 2: Long-dated Conventional gilt'''''</span> | ||
:A very long dated conventional gilt is the 4% Treasury Gilt 2060. | :A very long dated conventional gilt is the 4% Treasury Gilt 2060. | ||
:It will pay interest at 4% per year | :It will pay interest at 4% per year until 2060. | ||
:<span style="color:#4B0082">'''''Example: Index-linked gilts'''''</span> | :<span style="color:#4B0082">'''''Example 3: Index-linked gilts'''''</span> | ||
:Index-linked gilts pay out larger amounts, the higher the rate of inflation. | :Index-linked gilts pay out larger amounts, the higher the rate of inflation. | ||
| Line 36: | Line 36: | ||
:The 'index' they are linked to is the UK Retail Prices Index (RPI). | :The 'index' they are linked to is the UK Retail Prices Index (RPI). | ||
:About 25% of gilts are index-linked, with 75% being conventional. | :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. | |||
The term 'gilt' is also used to refer to the debt of certain other central governments, especially US government | 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. | |||
== See also == | == See also == | ||
* [[Bill]] | |||
* [[Bond]] | * [[Bond]] | ||
* [[Bond vigilante]] | |||
* [[Bund]] | * [[Bund]] | ||
* [[Debt Management Office]] | |||
* [[Exempt gain]] | * [[Exempt gain]] | ||
* [[G+]] | * [[G+]] | ||
* [[ | * [[High-yield]] | ||
* [[Index-linked gilt]] | * [[Index-linked gilt]] | ||
* [[Investment grade]] | |||
* [[Liquid]] | |||
* [[Liquidity]] | |||
* [[Paper]] | * [[Paper]] | ||
* [[Risk asset]] | |||
* [[Risk-free asset]] | |||
* [[Risk-free rate of return]] | * [[Risk-free rate of return]] | ||
* [[Risk-off]] | |||
* [[Risk-off asset]] | |||
* [[Risk-on]] | |||
* [[Semi-annual rate]] | * [[Semi-annual rate]] | ||
* [[Share]] | |||
* [[Sovereign]] | * [[Sovereign]] | ||
* [[Stock]] | * [[Stock]] | ||
* [[Stock exchange]] | |||
* [[Swap spread risk]] | * [[Swap spread risk]] | ||
* [[Tap stock]] | * [[Tap stock]] | ||
* [[Treasury]] | * [[Treasury]] | ||
* [[Treasury securities]] | |||
* [[United Kingdom]] | * [[United Kingdom]] | ||
[[Category: | [[Category:Accounting,_tax_and_regulation]] | ||
[[Category:Financial_products_and_markets]] | |||
Revision as of 05:46, 10 February 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.
See also
- Bill
- Bond
- Bond vigilante
- Bund
- Debt Management Office
- Exempt gain
- G+
- High-yield
- Index-linked gilt
- Investment grade
- Liquid
- Liquidity
- Paper
- Risk asset
- Risk-free asset
- Risk-free rate of return
- Risk-off
- Risk-off asset
- Risk-on
- Semi-annual rate
- Share
- Sovereign
- Stock
- Stock exchange
- Swap spread risk
- Tap stock
- Treasury
- Treasury securities
- United Kingdom
