Inflation-Linked Corporate Bonds To Replace Sovereigns For Institutions?

A survey of institutional investors and members of corporate finance departments by EDHEC-Risk Institute shows that the issuance of inflation-linked bonds may provide a solution to both corporations and institutional investors.  For investors, inflation-linked corporate debt could be an ideal instrument for hedging their liabilities at a time when sovereign debt is no longer considered the default asset for pension funds’ asset-liability management. 

For corporations, issuing inflation-linked debt would ultimately limit the firm’s risk and increase the value of its shares.

Overall, the responses reflect strong agreement with many of EDHEC-Risk Institute’s key propositions, and the central tenet of the paper: that for many firms, current debt-management practices can be improved through the issuance of inflation-linked debt.

For more info, see:

Reactions to the EDHEC Study “Optimal Design of Corporate Market Debt Programmes in the Presence of Interest-Rate and Inflation Risk.”

 

About Tom Groenfeldt

I write - mostly about finance and technology, sometimes about art, occasionally about politics and the intersection of politics and economics. My work appears on Forbes.com and International Finance Magazine. The Financial Brand ranked me 20 on a list of the top 25 global influencers in financial services and Jay Palter included me in his list of 250 fintech influencers to follow in 2016 http://bit.ly/1SSRXC6
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