A “yearling bond” refers to a specific type of bond issued by a UK local authority. These bonds are designed to mature, or become redeemable, one year after their initial issuance.
Local authorities in the UK, such as city councils, have the ability to issue bonds as a way to raise funds for various projects or to manage their finances. These bonds are essentially loans that investors provide to the local authority. In return, investors receive periodic interest payments (coupon payments) over the life of the bond, and the principal amount is returned to them when the bond matures. In the case of yearling bonds, this maturity period is one year from the date of issue.
Investing in bonds, including yearling bonds, can offer a relatively stable source of income for investors. However, as with any investment, it’s important for investors to carefully consider the risks and potential returns associated with investing in bonds. Consulting with a financial advisor or conducting thorough research before investing is always a prudent approach.