Financial sustainability and Gilts: Difference between pages

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Financial sustainability - traditionally defined - is achieved when an organisation is able to earn reliable financial surpluses and generate cash in the medium and longer-term.
Most commonly, UK central government debt.


Financial sustainability includes the ability to pay back borrowings over time, with interest, while maintaining necessary levels of internal investment.


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


It is generally important both to earn consistent profits, and consistent positive cash flows.


And for the expectations for doing so in the future to be resilient to potential adverse conditions and events.
 
:<span style="color:#4B0082">'''''Example 1: Short-dated Conventional gilt'''''</span>
 
:An example of a short-dated conventional UK gilt is the 2% Treasury Gilt 2020.
 
: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 2: 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 until 2060.
 
 
:<span style="color:#4B0082">'''''Example 3: 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 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.




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In more recent usage, financial sustainability also has a broader meaning, overlapping with ''sustainable finance.''
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 ==
* [[Adverse]]
* [[Bill]]
* [[Assurance]]
* [[Bond]]
* [[Bottom line]]
* [[Bund]]
* [[Capital expenditure]]
* [[Exempt gain]]
* [[Cash flow]]
* [[G+]]
* [[Credit rating agency]]
* [[ILG]]
* [[Financial]]
* [[Index-linked gilt]]
* [[Free cash flow]]
* [[Paper]]
* [[Profit]]
* [[Risk-free rate of return]]
* [[Resilience]]
* [[Semi-annual rate]]
* [[Risk management]]
* [[Sovereign]]
* [[Sustainability]]
* [[Stock]]
* [[Sustainable ]]
* [[Swap spread risk]]
* [[Sustainable finance]]
* [[Tap stock]]
* [[Triple bottom line]]
* [[Treasury]]
* [[United Kingdom]]


[[Category:The_business_context]]
[[Category:Corporate_financial_management]]

Revision as of 11:39, 4 March 2021

1.

Most commonly, 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 is the 2% Treasury Gilt 2020.
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 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