Demand gridlock
Utility company National Grid is a prominent issuer of inflation-linked debt in the highly active UK market. However, the firm is now looking at alternative sources of funding. By Alexander Campbell
Pressure from the UK Pensions Regulator for pension funds to wipe out their funding deficits drove many to snap up any long-dated assets available in early 2006 - especially the few long-term inflation-linked bonds then on the market. Yields on the UK's 1.25% 2055 inflation-linked gilt fell to a record low of 38 basis points in January last year, as pension funds piled into the inflation market.
UK issuers, and in particular those with revenues linked to inflation, took advantage of these low
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