Buy a Bond / UK Gilt

I am new to bond investing, Have not yet purchased anything, will someone run a rule to see if I get same answer? Example uk gilt 5% 2025 TR25. if i buy 10000 qty, What is total cost, what income pa, what do i get back held to maturity, I have done my own sums, looking for reassurance that is correct. Thank you to any kind soul for help

Comments

  • Looking at LSE website suggests the following. You may get a slightly better or worse price depending on your broker

    Price 102.14p so 10,000 = £10,214 plus commission
    At redemption 7 Sept 2025 you get back £10,000
    Income is 2% of par value so you will get £200 per annum (split £100 7 Sept and £100 7 March)
    Ex dividend date is 26th August. So if you buy right now you will pay just under an additional £100 for the last 6 months coupon (accrued interest) and you will then receive the £100 coupon on 7th September leaving you in an neutral position. If you wait until after 26th August your first coupon will be in March 2016 and there will be no accrued interest added to the purchase price.

    So overall if you buy now and hold to maturity you will see a small loss on redemption and thus overall your return will be a little under 1.8% per annum for the next 10 years.

    Not very exciting . . .
  • Sorry that was the 2% 2025 I just did! Principle is the same for the other bond
  • 5% 2025 has a price of 1.29 ish so a much bigger loss on redemption but you get £500 per annum coupon. The fixed income investor website shows a yield to redemption of 1.69% so similar end result to the 2% bond
  • Thank you, that was very helpful
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