Understand Inflation Linked Bonds

You can set up and work with inflation linked bonds (ILB) in Eagle Accounting. Inflation linked bonds, also known as TIPS securities in the United States, Real Return Bonds in Canada, Treasury Gilts or Treasury Stocks in the United Kingdom, or as generic inflation indexed bonds and linkers, are debt instruments whose principal and subsequent interest payments are adjusted based upon the rise of inflation. Eagle Accounting supports two main types of inflation linked bonds,

Capital Interest Bond (CIB). CIBs have a fixed real coupon rate and a nominal principal value that rise with inflation. Periodic coupon bonds are calculated by multiplying a real coupon rate by the inflation-adjusted principal. The inflation-adjusted principal is repaid at the maturity of the bond. Current governments that issue ILBs using this method are the USA, Canada, Australia, France, Italy, and New Zealand.

Index Annuity Zero Coupon Bonds (IAZCB). These securities are zero coupon bonds that pay an inflation-adjusted principal at the time of redemption. In short, any ILB that is considered a Capital Interest Bond or an Index Annuity Bond, which has been stripped to a principal only strip, can be considered an IAZCB.