UK insurers turn up leverage on structured gilt trades
Par-par asset swaps give way to higher-leverage structures as funding costs increase
UK life insurers have amped up leverage in structured gilt trades to as much as four times, as an uncertain economic outlook and higher financing costs erode returns on popular asset swap trades that monetise a pricing gap between bond yields and interest rate swaps.
Insurers have piled into leveraged asset swaps over the past two years to support pricing on pension buyout deals amid ultra-tight
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