Get real: asset managers ditch swaps for loans

Margin liquidity risks behind demand for physical, long-dated assets

Sumit Mehta, investments manager, Legal & General

Interest rate swaps are losing their appeal. Faced with new clearing and bilateral margining rules – and the prospect of huge cash calls during times of stress – asset managers with long-dated liabilities to hedge are increasingly turning to real assets instead.

Or, to put it another way, pension funds and insurers are replacing banks as lenders, particularly in long-term, index-linked loans to infrastructure projects, social housing partnerships and the like, where the associated regulatory bur

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