Asset swaps continue to support inflation market

Asset swaps continue to be a key source of inflation supply. But with the pick-up for asset swap investors much lower than it was last year, how successful have dealers been in cultivating new sources of inflation supply? By Christopher Whittall

Inflation traders have long had to battle with imbalanced, one-way markets. The UK was the exception. With a ready source of supply from utility firms, private finance initiatives and real estate companies, the UK boasted one of the most liquid, stable inflation markets in the world. That changed with the collapse of Lehman Brothers. Literally overnight, corporate issuance of inflation dried up, leaving the market reliant on government inflation-linked bonds as the only regular source of