Decision time on low-yield corporate debt
Pension funds and insurers face difficult decisions as rising interest rates lessen the lure of older, low-yield corporate bonds.
09 January 2014
Is it time for fund managers to weigh up the benefits of selling low yielding bonds?
Andrew Burton, Head of Liability Management, says funds must weigh up whether to hold onto these bonds and absorb paper losses or sell them to crystallise a loss before switching into other asset classes, credit quality or duration.
Understanding what may motivate or constrain investors holding or selling their stocks of low-yield bonds is vital for any corporate which might be thinking of issuing new debt or buying back old paper.
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