UK pension fund buyouts frustrated by ‘dirty’ CSAs

Contracts allowing schemes to post corporate bonds as collateral are obstructing risk transfer to insurers


Pension funds holding legacy collateral contracts that allow them to post corporate bonds as margin against their derivatives positions are finding the agreements to be an obstacle when looking to offload their liabilities to insurance companies.

When facing margin calls, corporate bond credit support annexes (CSAs), known as ‘dirty’ CSAs, can be a valuable source of liquidity for pension funds. But if a fund wants to transfer its derivatives assets to insurers as part of a buyout process, few

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