Bring broth to a boil in a large saucepan; stir in grits. Reduce heat, and simmer, stirring occasionally, 5 minutes. Cover.
Melt butter in a large skillet; add onion and peppers, and sauté 5 minutes or until tender. Stir in grits, Cheddar cheese, and next 3 ingredients. Pour into a lightly greased 13- x 9-inch baking dish.
Bake at 350° for 30 minutes or until set; serve grits immediately.