Summary
- UK bond prices have plunged recently after a sharp sell-off in government bonds (gilts) was compounded by forced selling from distressed UK pension funds.
- For now, some forced selling remains as UK-defined benefit pension funds strive to meet margin calls on the leveraged interest-rate hedging strategies they instituted as part of liability-driven investing (LDI) programs.
- UK pension funds’ distressed-selling losses from the crisis have been estimated to total £150 billion.
For further details see:
Can The Sell-Off In Sterling Corporate Bonds Last?