Treasury Gilt vs Treasury Stock - difference(s)?

intalex

I've just noticed that most government bonds are issued as Treasury Gilt (e.g. TE28 - 4 3/8% Treasury Gilt 2028) but some are issued as Treasury Stock (e.g. TR38 - 4 3/4% Treasury Stock 2038), but I can't work out if there are any differences between how they work and underlying risks. Anyone with some info on this? Thanks in advance

masonic

The DMO favoured the name "Treasury Stock" prior to 2005/06, but switched to "Treasury Gilt" after that, so it gives you a hint as to when it was issued.

QrizB

I hope you don't mind me jumping on this thread with a related question ...

Why is the 2034-maturing index-linked gilt TRTQ called TRTQ rather eg. T34I or TR34? There must be a reason?

masonic

QrizB said:

I hope you don't mind me jumping on this thread with a related question ...

Why is the 2034-maturing index-linked gilt TRTQ called TRTQ rather eg. T34I or TR34? There must be a reason?

TR34 is already in use (along with T34 and TS34). Perhaps T34I is being reserved for something else, or they just want to keep you guessing!

It's not the only anomalous one, and not the worst. The nominal gilts T4Q and TR4Q mature in Mar 2036 and Dec 2055 respectively, while one might have guessed 2044 from the ticker. There is also the index-linked gilt TR8F (also 2055, not in the 2080s).

OldScientist

The website at https://www.jdawiseman.com/papers/finmkts/gilt_statics.html contains an excellent explanation of how short names are derived, but not the tickers. However, I suspect that there is some crossover, so that T4Q is treasury 4.25% coupon - the oddities tend to be older gilts (but not always).

Pen_Geek

Hi, I hope nobody minds if I add further questions around the TR4Q gilt.

I have just come across these gilts and need some further info to see if suitable please.

I understand the bonds are valued at £1 but are currently selling around the 82p mark. This bond pays 4.25% twice a year.

1. Is this 4.25% return based on the £1 bond face value or the 82p purchase price?
2. If I transfer a pension investment into a SIPP account for these gilts bonds (can I do this?), would the twice yearly returns be tax free or taxable income or capital gains exempt?
3. Can I add to / remove from any bonds if needed or is it locked in until 2055?

Does anyone have a good source of information for these, that will give me more details as I've only been able to find performance type details from various investing platforms.

Apologies if this is a lot but thank you for any information.

InvesterJones

https://forums.moneysavingexpert.com/discussion/comment/81962381#Comment_81962381

1. based on £1. Note it's not 4.25% twice a year, it's two payments which total 4.25% over the year.
2. If your SIPP provider allows transfers in, then yes - they'd likely be sold as cash first. And yes, within the SIPP they would not be taxed, but you may pay tax on draw down just like anything else within the SIPP
3. Yes, you can buy more bonds or sell them at any point - for what the market asks for them

poseidon1

https://forums.moneysavingexpert.com/discussion/comment/81962381#Comment_81962381

Just to add to @InvestorJones's explanation, when buying any gilt prior to the next interest payment the purchaser will also have to pay the seller for accumulated accrued interest to date of purchase which is added to 82p price together with any commission the platform might charge.

You as the gilt purchaser will eventually recoup this accrued interest when you receive your 1st interest payment.

You are are unlikely to find explanatory information on that particular gilt, but the following general article on gilt pricing and the UK's current poor standing in this regard, is worth a read. The current ethos is to buy UK gilts at the shorter end of the yield curve rather than the long end you are considering -

https://monevator.com/gilts-hoping-for-the-best-experiencing-not-the-worst/

Nebulous2

https://forums.moneysavingexpert.com/discussion/comment/81962431#Comment_81962431

Surely that depends how long you intend to hold them and how much you value the income levels on offer.

If you hold to maturity then you can get a guaranteed 5.4% in a traditional gilt or 2.1% above CPI in an index-linked one over 20 years.

Even if you don't hold it right through you may be able to sell at a profit if you watch your timing.

I bought £30k of gilts in my SIPP a year ago. 50/50, traditional / index linked.

At one point they were up over £2800. They have taken a hammering during the Iran war but they are still up over £1000.

I've also had just under £1000 in coupon payments during that time.