Gilts

Gilts are simply British government bonds.

A very wide range of gilts are in issue at any given time, with remaining times till maturity of up to 50 years. There are still some irredeemable gilts (ones that will never mature, but pay a perpetual fixed income stream) in issue, but no more are being issued.

One particularly interesting type of gilts are index linked gilts, which are the ultimate in safe securities for British investors. Not only are they government backed (enough, in itself, to classify investments as risk free) but all payments are linked to inflation, which means that even the risk of inflation eating away at the real value of the investment is eliminated. This is an investment that is well suited to investors who need to guarantee their income and do not need high returns.

The yields to maturity (also called redemption yields) on gilts are the risk free rates, over various periods of time, for valuation models for British securities and sterling denominated eurobonds.

More information on gilts is available from the Debt Management Office website.