Gilt Edged Security Gilts Basics

Gilt Edged Securities or Gilts are British Government securities and issued by the government to raise money. Gilts are considered safe because the government will not default on interest and capital repayment.

Many large organisations such as pension companies life companies and other financial organisations to small individual investors use Gilts as a large portion of their portfolio. As a result there is a large market of people trading gilts. Because of this sometimes they can be bought and sold for amounts above or below there face value.

• Par Value – This is the face value that is paid when the it is paid back.
• Redemption date – This is the date at which the government will pay back the Par Value.
• Coupon – The percentage rate that will be paid throughout the Gilts term. Interest is paid twice a year and is based on the par value rather than its current price.