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Question

What types of GILT are available?

Answer

There are four main types of Gilt currently available: conventional, index-linked, double-dated and undated.

Conventional Gilts
This type of Gilt is a guarantee by the Government to pay the holder a fixed amount of interest every six months until the loan is re-paid or redeemed, e.g. 8% Stock 2012 (Redeemed in 2012).

Index-Linked Gilts
This differs from conventional Gilts in that interest payments are not at a fixed rate. The coupon rate is set in line with short term interest rates and is paid on a half yearly basis. The rate of interest paid is linked to the UK Retail Price Index (RPI), e.g. 2% Index Linked 2013.

Double-Dated Gilts
This type of Gilt is issued with two maturity dates. This type of Gilt entitles the Government to redeem or repay the Gilt at any time between the dates, e.g. 7% Loan 2012/2015. This means that the Government can choose to repay the stock at any time from 2012 onwards, but must repay the stock in 2015 at the latest. It is important to remember that the choice is the Government's not the investor's.

Undated Gilts
These are the oldest Gilts currently in issue. The redemption of these Gilts is at the discretion of the Government.eg. 3½ % War Loan.

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