Spread the love, love the spread
We analyse how assets such as investment grade bonds, infrastructure and prime property loans, can provide attractive spreads and diversification benefits for annuities.
Few need to be reminded how difficult it is to find attractively-priced assets in current markets. It’s a particular problem for any provider of pension transfers. To fund such deals and remain competitive, providers need assets that outperfom the gilts and swaps that are the basis for pricing pension risk transfer deals. But despite the recent bounce in yields, spreads remain wafer-thin, particularly in assets favoured for annuities, such as investment grade bonds, infrastructure and prime property loans.