Index linked gilt coupons and valuations

Reg_Smeeton

Hi all,


I bought a quantity of 0.25% 22/03/2052 Index-Linked Gilts in December 2023 through Hargreaves Lansdown.

Due to the clean/dirty price issue,  HL are unable to display a correct “live” valuation of the gilts in the online portal, however I have just received my first coupon payment of £25.71… is my understanding correct that this would have given me a valuation of £20,568 at 22/3/24?

TIA… I’m happy with my investment as part of my wider portfolio but still finding some of the peculiarities around it a bit hard to get my head around!

coyrls

You can track the dirty price here:https://reports.tradeweb.com/account/login/?ReturnUrl=/closing-prices/gilts/

You can't work out the dirty price from your coupon payment.  The 0.25% is 0.25% of the nominal value of the gilt, increased by inflation, it isn't 0.25% of the current price.

Reg_Smeeton

coyrls said:

You can't work out the dirty price from your coupon payment.  The 0.25% is 0.25% of the nominal value of the gilt, increased by inflation, it isn't 0.25% of the current price.

Many thanks… should have known it wouldn’t be that simple!

Linton

Reg_Smeeton said:

Hi all,


I bought a quantity of 0.25% 22/03/2052 Index-Linked Gilts in December 2023 through Hargreaves Lansdown.

Due to the clean/dirty price issue,  HL are unable to display a correct “live” valuation of the gilts in the online portal, however I have just received my first coupon payment of £25.71… is my understanding correct that this would have given me a valuation of £20,568 at 22/3/24?

TIA… I’m happy with my investment as part of my wider portfolio but still finding some of the peculiarities around it a bit hard to get my head around!

The interest and capital value of a gilt are not directly linked...

The interest you receive is simply the coupon rate X the face value of the IL Gilts.  The face value is £100 increased by inflation since the gilt was issued.  Both of these factors are fixed.

The capital value of the gilt holding between issue and maturity is based on market forces, largely dependent on comparative interest rates generally available at the time and so can change significantly during the next 29 years until maturity.  I hope you are not relying on selling your investment a long time before 2052 as long dated gilts can be very volatile.

Reg_Smeeton

Thanks Linton, no I’m planning to hold to maturity, just wanted a valuation for information purposes