Inflation-indexed bond

Inflation-indexed bond

Inflation-indexed bonds (also known as inflation-linked bonds or colloquially as linkers) are bonds where the principal is indexed to inflation. They are thus designed to cut out the inflation risk of an investment. [ Unfortunately, income taxes bring some inflation risk back to such bonds. See tax on the inflation tax ] . The first known inflation-indexed bond was issued by the Massachusetts Bay Company in 1780. The market has grown dramatically since the British government began issuing inflation-linked Gilts in 1981. As of 2008, government-issued inflation-linked bonds comprise over $1.5 trillion of the international debt market. [cite article
last = Barclays Capital Research
first =
authorlink =
coauthors =
title = Global Inflation-Linked Products: A User's Guide
work =
publisher =
date = 2008-02-20
url =
format =
doi =
accessdate = 2008-02-21
] The inflation-linked market primarily consists of sovereign debt, with privately issued inflation-linked bonds constituting a small portion of the market.


Inflation-indexed bonds pay a periodic coupon that is equal to the product of the inflation index and the nominal coupon rate. The relationship between coupon payments, breakeven inflation and real interest rates is given by the Fisher equation. A rise in coupon payments is a result of an increase in inflation expectations, real rates, or both.

For some bonds, such as the Series I Savings Bonds (U.S.), the interest rate is adjusted according to inflation.

For other bonds, such as in the case of TIPS, the underlying of the bond changes, which results in a higher interest payment when multiplied by the same rate. For example, if the annual coupon of the bond was 5% and the underlying principal of the bond was 100 units, the annual payment would be 5 units. If the inflation index increased by 10%, the principal of the bond would increase to 110 units. The coupon rate would remain at 5%, resulting in an interest payment of 110 x 5% = 5.5 units.

A special case is that of the Australian Capital Indexed Bond, in which the interest rate is adjusted as well as the principal.

Global issuance

The most liquid instruments are Treasury Inflation-Protected Securities (TIPS), a type of US Treasury security, with about $500 billion in issuance. The other important inflation-linked markets are the UK Index-linked Gilts with over $300 billion outstanding and the French OATi/OAT€i market with about $200 billion outstanding. Germany, Canada, Greece, Italy, Japan, Sweden and Iceland - as well as a number of smaller emerging markets - also issue inflation-indexed bonds; the Australian government stopped issuing the Capital Indexed Bond in 2003 [cite web

Also, Chile, Korea, Poland, Israel, and Mexico issue such bonds.

last =
first =
authorlink =
coauthors =
title = Real Return Bonds
work =
publisher =
date =
url =
format =
doi =
accessdate = 2006-06-30

Inflation-indexed bond indices

Inflation-indexed bond indices include Barclays World Government Inflation-Linked Index.


ee also

* Fisher equation

External links

* [ TIPS]
* [ U.S. Series I Savings Bonds]
* [ Inflation-linked Gilts]
* [ French inflation-indexed bonds]


* Deacon, Mark, Andrew Derry, and Dariush Mirfendereski; "Inflation-Indexed Securities: Bonds, Swaps, and Other Derivatives" (2nd edition, 2004) Wiley Finance. ISBN 0-470-86812-0.

Wikimedia Foundation. 2010.

См. также в других словарях:

  • inflation-indexed bond — UK US noun [C] FINANCE ► a type of bond that is sold by the US Treasury, which pays a fixed rate of interest but whose principal (= the amount of money invested) changes every six months based on the rate of inflation …   Financial and business terms

  • Inflation-Linked Bond — Inflationsindexierte Anleihen (auch Inflationsanleihe, inflation linked Bond, kurz Linker, Inflationsbond oder Inflation indexed bond genannt) sind Wertpapiere, deren Kupon und/oder Nominalwert an einen Verbraucherpreisindex gekoppelt sind. Das… …   Deutsch Wikipedia

  • indexed bond — bond whose payments are linked to an index, e.g., the consumer price index. Bloomberg Financial Dictionary A bond whose payments are linked by an index (such as a consumer price index). Exchange Handbook Glossary * * * indexed bond indexed bond ➔ …   Financial and business terms

  • Indexed bond — Bond whose payments are linked to an index, e.g. the consumer price index. The New York Times Financial Glossary * * * indexed bond indexed bond ➔ bond * * * indexed bond UK US noun [C] FINANCE ► a type of bond in which interest or other payments …   Financial and business terms

  • Inflation-Indexed Security — A security that guarantees a return higher than the rate of inflation if it is held to maturity. In other words, an inflation indexed security guarantees a real return. These usually come in the form of a bond or note …   Investment dictionary

  • Bond (finance) — In finance, a bond is a debt security, in which the authorized issuer owes the holders a debt and, depending on the terms of the bond, is obliged to pay interest (the coupon) to use and/or to repay the principal at a later date, termed maturity.… …   Wikipedia

  • Inflation derivatives — In finance, inflation derivatives (or inflation indexed derivatives) refer to over the counter and exchange traded derivatives that are used to transfer inflation risk from one counterparty to another. Typically, real rate swaps also come under… …   Wikipedia

  • Inflation tax — An inflation tax is an analogous pejorative for the economic disadvantage suffered by holders of cash and cash equivalents in one denomination of currency due to the effects of inflation, which acts as a hidden tax that subtracts value from those …   Wikipedia

  • Bond duration — Financial markets Public market Exchange Securities Bond market Fixed income Corporate bond Government bond Municipal bond …   Wikipedia

  • Bond convexity — In finance, convexity is a measure of the sensitivity of the duration of a bond to changes in interest rates, the second derivative of the price of the bond with respect to interest rates (duration is the first derivative). In general, the higher …   Wikipedia

Поделиться ссылкой на выделенное

Прямая ссылка:
Нажмите правой клавишей мыши и выберите «Копировать ссылку»