LDI managers spurn cleared inflation swaps

Shortage of liquid collateral seen as barrier to clearing inflation swaps

Wyn Francis
Wyn Francis, BT Pension Scheme

Pension funds and insurers are avoiding cleared inflation swaps because they lack the collateral and liquidity to meet intraday margin calls. Low benchmark interest rates have forced liability-driven investors into illiquid investments, such as infrastructure and real-estate loans, which offer higher yields than government bonds, according to speakers at the Buy-side Risk conference in London on April 15.

"There's been a hunt for yield. Bank disintermediation has happened – coincidentally, maybe

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