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LDI managers spurn cleared inflation swaps
Shortage of liquid collateral is seen as a barrier to clearing inflation swaps, with LDI managers opting to hedge with real assets, conference hears
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Pension funds and insurers are avoiding cleared inflation swaps because they lack the collateral and liquidity to meet intraday margin calls. Low benchmark interest rates have forced liability-driven investors into illiquid investments, such as infrastructure and real-estate loans, which offer higher yields than government bonds, according to speakers at the Buy-side Risk conference in London on April 15.
"There's been a hunt for yield. Bank disintermediation has happened – coincidentally, maybe
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