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Gilt-edged securities
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Gilt-edged securities
Gilt-edged securities, also referred to as gilts, are bonds issued by the UK Government to finance the national debt and fund government expenditure (both current and capital in nature); thus they represent a debt owing from the government. They are sterling-denominated, tradeable debt instruments that are generally regarded as carrying very low credit risk and form the core of the United Kingdom’s marketable central government debt. The term is of British origin, and referred to the debt securities issued by the Bank of England on behalf of His Majesty's Treasury, whose paper certificates had a gilt (or gilded) edge.
In 2002, the data collected by the British Office for National Statistics revealed that at that time about two-thirds of all UK gilts were held by insurance companies and pension funds, but the proportion has since rapidly reduced, due especially to the decline in defined benefit pension schemes. Since 2009, large quantities of gilts have been created and repurchased by the Bank of England under its policy of quantitative easing. Having been traditionally regarded as a "safe haven" asset class, overseas investors held around 31 percent of gilts in issue by the second quarter of 2024.
On 2 September 2025, the UK Debt Management Office sold a record £14 billion of the 4.75% October 2035 gilt with the highest yield since 2008. The syndicated offering of the new 10-year gilt was oversubscribed with more than £141 billion of orders.
Modern gilt-edged securities fall into several main types:
Many gilts are eligible to be separated into their individual cash flows and traded as gilt strips.
A small amount of legacy undated and double-dated gilts remained into the early 21st century before being redeemed.
In his 2019 book about the gilt market from 1928 to 1972, William A. Allen described gilt-edged securities as "long‐duration liabilities of the UK A small number of legacy undated and double-dated gilts remained in circulation into the early twenty-first century before being redeemed, government" that were traded on the London Stock Exchange.
Today, the term "gilt-edged security" or simply "gilt" is used in the United Kingdom as well as some Commonwealth nations, such as South Africa and India. However, when reference is made to "gilts", what is generally meant is UK gilts, unless otherwise specified. Colloquially, the term "gilt-edged" is sometimes used to denote high-grade securities, consequently carrying low yields, as opposed to relatively riskier, below investment-grade securities.
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Gilt-edged securities
Gilt-edged securities, also referred to as gilts, are bonds issued by the UK Government to finance the national debt and fund government expenditure (both current and capital in nature); thus they represent a debt owing from the government. They are sterling-denominated, tradeable debt instruments that are generally regarded as carrying very low credit risk and form the core of the United Kingdom’s marketable central government debt. The term is of British origin, and referred to the debt securities issued by the Bank of England on behalf of His Majesty's Treasury, whose paper certificates had a gilt (or gilded) edge.
In 2002, the data collected by the British Office for National Statistics revealed that at that time about two-thirds of all UK gilts were held by insurance companies and pension funds, but the proportion has since rapidly reduced, due especially to the decline in defined benefit pension schemes. Since 2009, large quantities of gilts have been created and repurchased by the Bank of England under its policy of quantitative easing. Having been traditionally regarded as a "safe haven" asset class, overseas investors held around 31 percent of gilts in issue by the second quarter of 2024.
On 2 September 2025, the UK Debt Management Office sold a record £14 billion of the 4.75% October 2035 gilt with the highest yield since 2008. The syndicated offering of the new 10-year gilt was oversubscribed with more than £141 billion of orders.
Modern gilt-edged securities fall into several main types:
Many gilts are eligible to be separated into their individual cash flows and traded as gilt strips.
A small amount of legacy undated and double-dated gilts remained into the early 21st century before being redeemed.
In his 2019 book about the gilt market from 1928 to 1972, William A. Allen described gilt-edged securities as "long‐duration liabilities of the UK A small number of legacy undated and double-dated gilts remained in circulation into the early twenty-first century before being redeemed, government" that were traded on the London Stock Exchange.
Today, the term "gilt-edged security" or simply "gilt" is used in the United Kingdom as well as some Commonwealth nations, such as South Africa and India. However, when reference is made to "gilts", what is generally meant is UK gilts, unless otherwise specified. Colloquially, the term "gilt-edged" is sometimes used to denote high-grade securities, consequently carrying low yields, as opposed to relatively riskier, below investment-grade securities.