Pension funds weigh corporate bonds as margin for gilt repo

Stung by disastrous losses during last year’s LDI squeeze, funds consider greater range of collateral on gilt repo

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Financial firms including BlackRock are looking to offer gilt repo transactions using corporate bonds as variation margin. The service will be pitched at liability-driven investment funds and will aim to allow the funds to provide a broader range of collateral during times of stress.

Experts say the product will give LDI funds greater flexibility, but there are concerns over valuation mismatches and operational feasibility.

“Corporate bonds as variation margin could be useful for pension funds

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