Gilts: Difference between revisions

From ACT Wiki
Jump to navigationJump to search
imported>Doug Williamson
(Add three examples of different types of gilts.)
(Mend link.)
 
(12 intermediate revisions by 2 users not shown)
Line 1: Line 1:
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.   




Line 8: Line 8:




:<span style="color:#4B0082">'''''Example: Short-dated Conventional gilt'''''</span>
:<span style="color:#4B0082">'''''Example 1: Short-dated Conventional gilt'''''</span>


:UK gilt is the 2% Treasury Gilt 2020 in denominations of £100.
:An example of a short-dated conventional UK gilt was the 2% Treasury Gilt 2020.


:Each £100 gilt repays £100 to the owner on 22 July 2020.
:Each £100 gilt repaid £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 also paid 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 paid 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.
:It was 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.
: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 for the next 40 years.
: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 a sense of confidence.''
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]].
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+]]
* [[ILG]]
* [[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]]
* [[UK gilt crisis]]
* [[United Kingdom]]
* [[United Kingdom]]


[[Category:Corporate_financial_management]]
[[Category:Accounting,_tax_and_regulation]]
[[Category:Financial_products_and_markets]]

Latest revision as of 08:05, 25 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.


See also