Just a year ago, there was talk of crisis in the UK inflation market. Since the adoption of accounting rule FRS 17 in 2005, UK companies have had to calculate their pension liabilities using a discount rate based on bond yields. Under pressure from regulators to eliminate deficits, pension funds had been piling into long-dated nominal and inflation-linked assets en masse.
The problem was, there simply wasn't enough supply. Corporate inflation issuance had more or less dried up, and while the