Getting the balance right

Opportunistic issuance of index-linked paper by a mass of utility companies last year reinvigorated the UK inflation swaps market. But will an expected decline in utility issuance this year create a supply/demand imbalance? Gareth Gore reports

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UK pension funds have become almost resigned to dealing with problems. Chief among these were the slumping equity prices that decimated investment portfolios earlier this decade, fast-rising life expectancy, and the introduction of accounting rule FRS 17 in 2005, which required companies to calculate pension liabilities using a discount rate based on bond yields at a time when yields were squeezing tighter and tighter. The congestion in the UK inflation market at the start of last year, however

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