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The yields on UK government bonds have dropped sharply ahead of new Chancellor Jeremy Hunt’s emergency fiscal statement due to be announced later on Monday to stabilise financial markets.
Gilts, short for gilt-edged securities, are bonds issued by HM Treasury to fund government spending.
They pay a fixed rate of interest, known as a coupon, plus a pledge to return your capital after a set term, primarily five, 10, 15 and 30 years.
Gilts are traditionally seen as low risk because the UK government has never defaulted on the coupon or capital, and are bought mostly by pension funds and other big global institutional investors, but ordinary people can buy them too.
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