Gilts - how to value

Flatfriend

Is there by any chance a kind person out there who could tell how to value gilts? I am doing my late mother's estate and she had some 3% Treasury Stock and some 3 1/2% War Stock. Looking at the site gov site for the daily prices I am afraid makes no sense to me. The capital employed was £904.85 and £20.00 respectively.

Thanking anyone in anticipation.

xylophone

There doesn't appear to be a 3% Treasury stock in issue? Edit - see Barak's post below.
http://www.dmo.gov.uk/reportView.aspx?rptCode=D1A&rptName=108489185&reportpage=D1A

http://www.selftrade.co.uk/quote-war-loan-a-3-5-perpetual---4uWAR remember that the value shown is per £100 of stock

http://www.hmrc.gov.uk/inheritancetax/how-to-value-estate/shares.htm#3
"How to value Government stock and bonds
If the deceased person held UK Government stock and bonds such as Gilts or Treasury Bills you should contact Computershare at the UK Debt Management Office to ask them for a valuation. They will need to see a copy of the death certificate. Use the closing price on the day the person died. There's no charge for valuations.
Contact the UK Debt Management Office (Opens new window)"

And see http://www.arch-fp.co.uk/adobe%20acr/pig1204.pdf for explanation of buying and selling gilts (for the layman by the UK DMO)

barak

xylophone wrote: »

There doesn't appear to be a 3% Treasury stock in issue?
http://www.dmo.gov.uk/reportView.aspx?rptCode=D1A&rptName=108489185&reportpage=D1A

xylophone - I'm certainly no expert on gilts - although I have held some - but there does appear to be an 'Undated' 3% Treasury Stock in existence.

Difficult to find much reference to it - it took some time to find these, and the prices don't match.....

http://investing.thisismoney.co.uk/gilts/

http://markets.ft.com/RESEARCH/markets/DataArchiveFetchReport?Category=BR&Type=UKG&Date=09/07/2012

xylophone

Thanks - I have now found it! I should have remembered "perpetuals"!
http://www.hl.co.uk/shares/shares-search-results/t/treasury-3-stock-undated/invest

Flatfriend

Thanks for your help - but I'm sitll a bit confused! Actually Computershare don't give valuations anymore they just acknowledged receipt of Death Cert and referred me to the website prices - so I found the gilts in question and the historical prices but wasn't sure whether they were quoted in pence or pounds but if the price is per £100 blocks does that mean the £100 is actually work £90 something. I am sorry that I am being particularly gormless here!

Masomnia

Flatfriend wrote: »

Thanks for your help - but I'm sitll a bit confused! Actually Computershare don't give valuations anymore they just acknowledged receipt of Death Cert and referred me to the website prices - so I found the gilts in question and the historical prices but wasn't sure whether they were quoted in pence or pounds but if the price is per £100 blocks does that mean the £100 is actually work £90 something. I am sorry that I am being particularly gormless here!

Nope not gormless at all, you're quite right. £100 is the 'nominal value', the historical prices will be in pounds and it's those quoted market prices in £ you should use.

Daniel_Elkington

Gilts pay an income and often look like this:

Treasury 4.25% 2019

This means the people you have lent money to (as it is debt) is the Treasury, you can buy bonds off Tescos and all sorts.

The % is the annual income, this is half paid twice a year.

The end date is when you get your 'par' or 'nominal value' back.

Some bonds are perpetual, the war bond is and from discussion it looks like the other one is too!.

It depends how many of them you have. If you have 20 war bonds then the treasury will pay you £70 a year forever! - I think you have to pay income tax on this.

You can sell them, as they are tradeable on the stock exchange, and they have their own value that they are trading at.

Treasury 3% are currently trading at about £76.43 - to buy they are not good value - you'd need to hold it for 25 years to get your money back - let alone considering inflation.
War bonds are going for 93.98 - again not a good buy.

It all depends on your needs, I'd go see someone - although I am biased about that!

xylophone

The DMO link explains that you should value at the closing "dirty" price at date of death.
http://www.dmo.gov.uk/reportView.aspx?rptCode=D3B.2&rptName=108578864&reportpage=Gilts/Daily_Prices

If the date of death were today, value of £904.85 Treasury 3% would be approx 9.085 x 80.38 = £730.25.

Value of £20 War Loan would be approx 0.2 x 98.36 = £19.67
http://www.dmo.gov.uk/index.aspx?page=Gilts/Gilt_Faq#Computershare
And see booklet in previous link (post 2 ) for explanation of nominal value (page 5)

Flatfriend

Thank you for your help - I now understand it and can proceed. I am very grateful - much clearer than the govt info!