Nearly 40% of sponsors have significantly lower credit ratings than their pension schemes, which increases the likelihood of those funds being forced to rely on asset sales in the liability-driven investment (LDI) crisis, writes Stephanie Baxter at Professional Pensions, citing research from Credit Benchmark.
“Research by Credit Benchmark found that 63 out of 156 defined benefit (DB) pension sponsors have credit ratings that are more than three notches weaker than their pension funds. It comes as some schemes have been forced to meet margin calls on their LDI positions as gilts rose sharply following the chancellor’s Mini Budget, causing the Bank of England (BoE) to intervene by buying long-dated gilts.“
Professional Pensions, October 13, 2022.
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