Gilts are cheap again...?

wmb194

CoolGeek123 said:

I logged into the tradeweb site, but could not find a way to see the YTM?
Can you please post the breadcrumb or the steps?

You can Google for YTM calculators but e.g., https://quantwolf.com/calculators/bondyieldcalc.html

GeoffTF

CoolGeek123 said:

I logged into the tradeweb site, but could not find a way to see the YTM?
Can you please post the breadcrumb or the steps?

Log in > Closing Prices > Gilt Closong Prices > Conventional > Submit

Yield is the redemption yield. It is giving "No records to display" at the moment, but that should be fixed.

CoolGeek123

JohnWinder said:

‘The TR28 gilt has the running yield as 5.55% and price as 108 GBP.  Let's say, I invest 5000 GBP to buy this security. Will I get assured returns for next 5 years (2023 to 2028) at 5.55% on my investment?’

Yes, that’s my understanding. The coupon is 6%, which is paid on £100, so if you buy it for £108, then you’ll get 100/108 of 6% ie 5.55%.

‘On Dec 2028, will the principle be returned to me? Will the principle returned be 100 GBP per bond or the bond price I paid? ’

Yes, but it’s principal, not principle because it’s the ‘main part’ not a foundation of belief. 

‘How to find out the YTM (to maturity) of TR28?’

Be a bit careful with bond terminology, like YTM. Some definitions and calculations of this term include the coupon payments being reinvested in the bond, and some don’t. I’ll guess that tradeweb does not include coupon reinvestment.

‘I logged into the tradeweb site, but could not find a way to see the YTM? Can you please post the breadcrumb or the steps?’

Before you go to tradeweb find the ISIN for the bond which is GB0002404191 because that’s how they’re  listed on tradeweb. On tradeweb, from the left menu choose ‘closing prices’, which opens up ‘FTSE gilt closing prices’. Select the date of purchase (as this is an input into the yield calculation). From the ‘security type’ pull down menu, select ‘conventional’ and hit ‘submit’. Find your GB0002404191 from the list. Read the yield.

Another way is to use the ‘yield’ function in a spreadsheet program like Numbers or Excel. This is more versatile because you can choose your own ‘buy price’ to model possible returns.

Thanks for correcting my "principal"
Your comment made me laugh...sorry for the typo. 

Adyinvestment

JohnWinder said:

Yes, that’s my understanding. The coupon is 6%, which is paid on £100, so if you buy it for £108, then you’ll get 100/108 of 6% ie 5.55%.

Exactly the formula I was trying to work out, cheers.

CoolGeek123

The tradeweb site does give the yield that is similar to the YTM calculations on an excel sheet. But strangely, the LSE website gives a different value of YTM - e.g. for gilt TR27; YTM on Tradeweb is ~ 4.2%. But on LSE site, it is shown as negative (-0.62%) -  londonstockexchange.com/stock/TR27/united-kingdom/company-page.

Is this difference because of coupon reinvestment as you have stated in your message?

JohnWinder

No idea, but that is hard to imagine as the explanation. Re-investing £4.25 (for each bond now selling at very close to £100) at 4.25%/year will give you 18p extra/yr. I can’t see that moving the needle much over the remaining four years. 

GeoffTF

CoolGeek123 said:

The tradeweb site does give the yield that is similar to the YTM calculations on an excel sheet. But strangely, the LSE website gives a different value of YTM - e.g. for gilt TR27; YTM on Tradeweb is ~ 4.2%. But on LSE site, it is shown as negative (-0.62%) -  londonstockexchange.com/stock/TR27/united-kingdom/company-page.

Is this difference because of coupon reinvestment as you have stated in your message?

The LSE number does not make any sense. I would ignore it.

JohnWinder

The formula on p6 of this doc suggests the yield is about 4%.
https://docs.londonstockexchange.com/sites/default/files/documents/dmo-formulae.pdf

Tax_Slave

Sorry for such a dumb question.
My grandmother used to have government gilts in the 70’s through to 90’s when they matured and they paid interest twice a year.

How do I find out when interest is paid (dates) for the following gilt?

TREASURY 3.25% 31/01/33 (TR33) 

Thanks

Linton

Tax_Slave said:

Sorry for such a dumb question.
My grandmother used to have government gilts in the 70’s through to 90’s when they matured and they paid interest twice a year.

How do I find out when interest is paid (dates) for the following gilt?

TREASURY 3.25% 31/01/33 (TR33) 

Thanks

I believe, but cannot find a reference confirming this, that the final interest payment is made at maturity with interest until then paid every 6 months.  Since TR33 matures on 31/1/2033 I would expect 1.625% interest to be paid on the 31st of January and July every year.