UK Gilts are bonds issued by the UK government through HM Treasury and listed on the London Stock Exchange. They are denominated in sterling and considered low-risk investments, since the UK government has never defaulted on payments. When investors buy gilts, they are essentially lending money to the government, which agrees to repay the loan with interest (coupon payments) and return the capital at a specific maturity date. These coupon payments are typically made twice a year. The Debt Management Office (DMO) manages and issues gilts on behalf of the government.
Gilts come in two main types: conventional and index-linked. Conventional gilts, making up the majority of the gilt portfolio, offer a fixed coupon every six months until maturity, when the initial investment is repaid. Index-linked gilts, on the other hand, have coupon and principal repayments that adjust with the UK Retail Prices Index (RPI), protecting them from inflation. Gilts are issued in units of £100 and have varying maturity dates, ranging from a few months to as long as 50 years. While the Treasury issues gilts at a certain price, their value fluctuates due to factors like interest rates, inflation, and supply and demand. As of January 2026, various gilts are available for purchase through the UK Debt Management Office's Gilt Purchase & Sale Service.
