World Government Bonds: Treasuries, Gilts, Bunds, BTPs, JGBs
Newsletter #51
United States: U.S. Treasuries
The yield on U.S. Treasury bonds are usually referred as the “risk-free rate” as it is extrememly unlikely the United States government will default on their debt.
U.S Treasuries are often the “flight to safety” asset, the asset which investors flock to when markets experience volatility.
There are several types of U.S. Treasuries:
Treasury Bills (T-Bills): Short-term bonds (maturities under one year) sold at a discount, with no coupons.
Treasury Notes (T-Notes): Mid-term bond (2 to 10 years), paying semiannual coupons.
Treasury Bonds (T-Bonds): Long-term bonds (20-30 years), also paying semiannual coupons.
TIPS (Treasury Inflation-Protected Securities): Inflation-linked U.S. Treasuries.
United Kingdom: Gilts
In the United Kingdom, government bonds are called Gilts. Gilts come in various forms:
Gilts: UK government bonds with all maturities are called Gilts.
Index-Linked Gilts: Coupons adjust based on the UK’s inflation rate (specifically the Retail Prices Index). Also known as “linkers”.
Germany: Bunds
Germany’s government bonds are known as Bunds which is short for Bundesanleihen. Bunds tend to have the lowest yield in the Eurozone, as Germany is considered as the safest borrower in the Eurozone.
Key types include:
Schatz: Short-term (2 years).
Bobls: Medium-term (5 years).
Bunds: Standard long-term bonds (10 years and above).
France: OATs
In France, government bonds are called OATs (Obligations Assimilables du Trésor).
Types of OATs include:
Fixed-Rate OATs: Standard French government bonds are called OATs.
OATi and OAT€i: Inflation-linked bonds, tied either to French inflation or European inflation.
Italy: BTPs
Italy’s government bonds are called BTPs (Buoni del Tesoro Poliennali). Italian bonds are perceived as higher risk so BTPs generally offer higher yields than Bunds or OATs.
The main types are:
Standard BTPs: Fixed-coupon, longer maturity bonds (from 3 to 50 years).
BTP Italia: Inflation-linked bonds designed for retail investors, tied to Italian inflation.
CCTs (Certificati di Credito del Tesoro): Floating-rate bonds.
Italian bonds can experience market volatility during Italian political or fiscal crises.
Japan: JGBs
Japan’s government bonds are called Japanese Government Bonds (JGBs). JGBs tend to be stable and low-yielding as most of the bonds are held domestically in Japan.
JGBs: maturities range from less than one year up to 40 years
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