Government bonds

Government bonds are bonds or IOUs issued by a government which pay a fixed rate of interest (or coupons) during their lifetime and pay the principal amount (or par value) on a set maturity date. They are considered to be relatively risk free compared to corporate bonds, as governments are less likely to go bust or default on interest payments.

Facts about government bonds

Governments issue government bonds in the denomination of that country, as well as in foreign currencies (also known as sovereign bonds)
In order to protect investors from inflation risk associated with plain vanilla government bonds, many governments may also issue inflation indexed bonds
Until the bond’s par value is redeemed at maturity, governments may raise taxes or print money in order to cover expenditure.

Our government bond expertise

M&G have been actively investing in the UK and overseas government bond market for a number of decades. We are currently one of the largest investors in the market for UK gilts and inflation-linked bonds, holding £23.2bn and over £9.1bn respectively*. Our expertise in the inflation linked bond sphere extends beyond the UK; we are vastly experienced in managing overseas inflation linked bonds in the US, as well as in Europe.

Using a variety of industry benchmarks, we are able to construct and manage institutional fixed income government bond portfolios, either in a segregated or a pooled fund format. There are a number of options available to investors wishing to combine this asset class with others, such as investment grade corporate bonds, high yield bonds and private debt. Our strategies have been designed to offer as much flexibility to clients as possible and can be tailored to meet their respective investment needs.

Find out more about the benchmark, absolute return and index linked strategies that are available through government bonds.

Alternatively, please contact a member of our Public Debt management team.

*as at 31 March 2013

Next Steps: Contact us

M&G Fixed Income asset classes: Leveraged Finance; Infrastructure Finance; Direct Lending; Private Placements

Pooled Funds: Visit our pooled funds website to find out more about our range of fixed income pooled funds.

For professional investors only. Not for onward distribution. No other persons should rely on the information contained within this website.
M&G Investments is a business name of Prudential Pensions Limited and M&G Investment Management Limited, and used by other companies within the Prudential Group. Prudential Pensions Limited and M&G Investment Management Limited are registered in England and Wales under numbers 992726 and 936683 respectively with their registered office at Laurence Pountney Hill, London, EC4R 0HH. Registered for VAT number, GB235 3237 81. Prudential Pensions Limited and M&G Investment Management Limited are authorised and regulated by the Financial Services Authority. Prudential Pensions Limited is registered on the FSA's register, No. 110434 (http://www.fsa.gov.uk/register/). M&G Investment Management Limited is registered on the FSA’s register, No.119328 (http://www.fsa.gov.uk/register/).
Prudential plc is not affiliated in any manner with Prudential Financial, Inc. a company whose principal place of business is in the United States of America.