Inflation-indexed securities

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Inflation-indexed securities

Securities such as bonds or notes that guarantee a return higher than the rate of inflation if the security is held to maturity.

Inflation-Indexed Securities

A bond or other fixed-rate security with an interest rate that varies according to inflation. An inflation-indexed bond, for example, may pay a fixed coupon plus an additional coupon with the amount adjusted every so often according to some inflation indicator, such as the Consumer Price Index. If these securities are held to maturity, then the investor guarantees that the return will exceed the rate of inflation. Inflation-indexed securities exist to provide a low-risk investment vehicle in which the return is guaranteed not to fall below the rate of inflation. See also: I Bond.
References in periodicals archive ?
The expected inflation rate over the next ten years implied by the inflation-indexed bonds rose 0.3 percentage points in the 14 months after July 2016, but then increased 0.8 percentage points in the next five months.
One can also look at tax-free bonds, non-convertible debentures, or NCDs, and inflation-indexed bonds.
The 10-year inflation-indexed bonds launched earlier this year, linked to the Wholesale Price Index could not attract much interest from investors.
Although the popular press often labels inflation-indexed bonds as "exotic securities," nothing could be farther from reality.
New fixed-income instruments, such as inflation-indexed bonds, will help.
"Over that time they've been first-movers into innovative strategies such as inflation-indexed bonds (three years before the US issued TIPS), separating alpha and beta, and adopting the All Weather principles eight years ago.
For average taxpayers, there are other take-aways: Additional rebate on home loans for first-time buyers, two-year extension of the Rajiv Gandhi Equity Scheme for first-time investors with higher limit of Rs.1.2 million, and launch of inflation-indexed bonds.
* Plans to issue inflation-indexed bonds * Proposes capital allowance of 15 pct to companies on investments of more than 1 billion rupees
The topics discussed include rediscovering the macroeconomic roots of financial stability policy, inflation-indexed bonds and the expectations hypothesis, the economics of credit default swaps, equilibrium in the initial public offering market, and carry trade and momentum in currency markets.
In order to boost the primary market for inflation-indexed bonds, primary dealers, who are the market makers of government bonds, will be required to offer sales and purchase prices of inflation-indexed bonds.
An alternative method of extracting inflation expectations arose from the issuance of financial assets indexed to the price indices of the economy (inflation-indexed bonds).
In the US, inflation-indexed bonds issued by the Federal government are called TIPS (Treasury Inflation Protected Securities).