Gilt-Edged Bond

AAA

DEFINITION of 'Gilt-Edged Bond'

A bond issued by the U.K. government at a fixed interest rate and maturity. "Gilt-edged bond" may also be used to refer to a quality fixed income investment issue from a blue chip company or highly credit-worthy government or agency. The term is essentially meant to convey the impression that these high-quality bonds have little risk of default. May also be referred to simply as "gilts."

INVESTOPEDIA EXPLAINS 'Gilt-Edged Bond'

A gilt-edged bond will generally have one of the top rating categories assigned by credit rating services such as Standard & Poor's or Moody's. Because of their quality and low degree of risk, gilt-edged bonds offer yields that are well below the yields offered by more speculative bonds. Despite their lower yields, gilt-edged bonds often form the cornerstone of investment portfolios for conservative investors whose top priority is capital preservation.

RELATED TERMS
  1. Bond

    A debt investment in which an investor loans money to an entity ...
  2. Gilt-Edged Switching

    The selling and repurchasing of certain high-grade stocks or ...
  3. Fixed-Interest Security

    A debt instrument such as a bond, debenture or gilt-edged bond ...
  4. AAA

    The highest possible rating assigned to the bonds of an issuer ...
  5. Blue Chip

    A nationally recognized, well-established and financially sound ...
  6. Interest

    1. The charge for the privilege of borrowing money, typically ...
RELATED FAQS
  1. What is the difference between a gilt edged bond and a regular bond?

    A gilt edged bond is a high-grade bond issue. The term "gilt" is of British origin and originally referred to debt securities ... Read Full Answer >>
Related Articles
  1. Retirement

    Bond Basics Tutorial

    Investing in bonds - What are they, and do they belong in your portfolio?
  2. Economics

    The Fed's Impact On Emerging Markets

    Higher US interest rates could make it more expensive for emerging market borrowers to service their debt commitments.
  3. Investing

    What’s The Essence Of Smart Beta In Fixed Income?

    In essence, smart beta strategies seek to re-write index rules to capture factors, such as value, quality, or low volatility, in their stock portfolios.
  4. Credit & Loans

    Understanding Credit Risk

    Credit risk arises whenever a borrower is expecting to use future cash flows to pay a current debt.
  5. Bonds & Fixed Income

    Should Junk Bond ETFs Be a Part of Your Portfolio?

    Should junk bonds be a part of your portfolio? Here's what you need to know.
  6. Professionals

    Vanguard Readies Muni Bond ETF

    Vanguard is set to roll out a muni bond ETF, the firm's first.
  7. Mutual Funds & ETFs

    Is the TLT ETF a Good Bet for the Long Run?

    Is the iShares 20+ Year Treasury Bond ETF (TLT) a good bet for the long run?
  8. Bonds & Fixed Income

    African Equities vs. Bonds: Risks and Rewards

    A look at the risks and rewards of exposure to African equities vs. bonds.
  9. Credit & Loans

    What are the Five C's of Credit?

    The five C’s of credit are what banks and other lenders evaluate about a potential borrower when making a lending decision. The five C’s are Character, Capacity, Capital, Collateral and Conditions. ...
  10. Economics

    Venezuela Teeters On Edge As Oil Revenues Shrink

    Low oil prices have drastically revised the economic status quo -- dealing a destabilizing blow to oil-exporters like Venezuela due to falling oil revenue.

You May Also Like

Hot Definitions
  1. DuPont Analysis

    A method of performance measurement that was started by the DuPont Corporation in the 1920s. With this method, assets are ...
  2. Asset Class

    A group of securities that exhibit similar characteristics, behave similarly in the marketplace, and are subject to the same ...
  3. Fiat Money

    Currency that a government has declared to be legal tender, but is not backed by a physical commodity. The value of fiat ...
  4. Interest Rate Risk

    The risk that an investment's value will change due to a change in the absolute level of interest rates, in the spread between ...
  5. Income Effect

    In the context of economic theory, the income effect is the change in an individual's or economy's income and how that change ...
  6. Price-To-Sales Ratio - PSR

    A valuation ratio that compares a company’s stock price to its revenues. The price-to-sales ratio is an indicator of the ...
Trading Center