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Gilt-swap spreads widen: An opportunity for pension schemes?

Cai Rees

From the blog: Investing in UK government bonds or using interest rate swaps are two of the more popular ways by which defined benefit pension schemes aim to match their liabilities.

 

Interest rate swaps have historically been more capital-efficient: you can enter into a swap under no obligation to commit all the cash required to buy the equivalent gilt outright – allowing pension schemes to leverage their assets.