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."

BREAKING DOWN '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.

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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 >>
  2. What are the maximum Social Security disability benefits?

    The maximum Social Security disability benefit amount for a single eligible person in 2015 is $1,165 per month, but you can ... Read Full Answer >>
  3. What is the relationship between the current yield and risk?

    The general relationship between current yield and risk is that they increase in correlation to one another. A higher current ... Read Full Answer >>
  4. What is a 'busted' convertible bond?

    In finance, a convertible bond represents a hybrid security that offers debt and equity features and risks. While a convertible ... Read Full Answer >>
  5. How can I use the funds from operations to total debt ratio to assess risk?

    The funds from operations (FFO) to total debt ratio is used in fundamental analysis to determine a company's financial risk. ... Read Full Answer >>
  6. Who or what is backing municipal bonds?

    Municipal bonds are backed by dedicated taxes or revenue sources related to specific projects, or by the full faith and credit ... Read Full Answer >>

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