The day of the hybrids
Hybrid structured notes with inflation-linked coupons are on investors’ shopping lists as energy prices and attendant inflationary fears have surged in the past two months. By Rachel Wolcott
Hybrid structures combining inflation with equity, credit, collateralised debt obligations (CDOs) and funds of hedge funds have gained in popularity in the past two years, and that looks set to continue. For the first time, investors such as insurance companies and pension funds are buying structured notes with inflation components. Significantly, worries about energy-related inflation have pushed up demand for these products even more in the past two months.
“The first requests we had were back
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