Gilt Issuance
Two types of gilts are issued by the Debt Management Office in Great Britain—conventional and index-linked gilts. Conventional gilts reflect the liability of the U.K. government, while index-linked gilts reflect the borrowing rate of the government. Therefore, Index-Linked gilts have smaller variations in yields.
The linked variation reflects coupon and principal payment links to the United Kingdom's Retail Price Index. Beginning in 2011, the Retail Price Index was supposed to change to a CPI link. This at least has been the prevailing proposal, but the House of Commons has yet to address this issue directly. Plus the DMO must reprice past and future issuances, which will take time. The real purpose for issuance of Index-Linked ...
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