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.”