Pensions eye collateral facilities to buffer market turmoil

Arrangements would allow funds to exchange riskier assets like corporate bonds for cash or gilts


In the wake of the margin crunch for UK pension funds, dealers have seen a surge in demand for committed collateral transformation facilities that allow the funds to swap less-liquid assets for eligible collateral to meet their calls.

Pension funds have been racing to shore up collateral buffers ahead of the scheduled end of the Bank of England’s emergency bond-buying programme on October 14. The BoE confirmed on October 12 that the support would end as planned, despite a Financial Times report

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