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1.875% Index-Linked Treasury Gilt 2049
Andrew1952
Posted: 07 March 2025 14:12:30(UTC)
#1

Joined: 06/07/2019(UTC)
Posts: 542

Hmm.

II have sent me an email inviting early access but 2049 is a longggggg way
ahead.

I really don't understand index linked gilts. Is the annual rate of inflation
(CPI or RPI ?) baked into the price if you sell before redemption, or do
you have to hold to redemption to get the full uplift ?.

Also, investors won't know what price they are going to be paying until
all the orders have been collected by the ?DMO, so how do we get an
idea of what a retail investor might be paying ?.

Some worked examples from anyone who knows would be much
appreciated.

Andrew

SF100
Posted: 07 March 2025 18:58:06(UTC)
#2

Joined: 08/02/2020(UTC)
Posts: 2,268

Thanks: 4178 times
Was thanked: 3079 time(s) in 1377 post(s)
Look at yieldgimp.com index-linked page.
It's the best resource we have as it is updated every 15mins.
Youd need university maths to work it all out yourself;life is too short.
Alternatively a free account on tradeweb, 24hrs behind.

The 'approx price' is the clean price and relative to par price.
It includes zero inflation uplift.
The 'nett price Inc accrued' does.
The nett price is what you pay to buy them.
The amount of indexing accrual would depend on when the gilt was issued.
The 'yield (real)' column is what you'll have achieved at maturity, per annum.

Back to the clean price; like normal bonds, it is volatile relative to markets rate expectations over the various durations.

The 'yield (real)' column is what you'll have achieved at maturity, per annum, and changes daily wrt clean price (or thereabouts)

I would not buy at auction because you won't know the real yield unless you are an IL expert

Real yld is to RPI til 2030 then CPI thereafter.
Though UK gov has changed their mind in the passed!!

You can lose money if deflation persists,even if held to maturity.
2 users thanked SF100 for this post.
Andrew1952 on 07/03/2025(UTC), Tim D on 08/03/2025(UTC)
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