Bond market feels impact of revised solvency rules

Isis bond manager James Foster believes revised solvency rules for life companies are having a majo...

Isis bond manager James Foster believes revised solvency rules for life companies are having a major impact on the fixed interest market. The proposed rules, called realistic reporting, are expected to be implemented this summer but institutions have already acted ahead of this. Foster noted: "The solvency requirements have major implications for the balance sheets of life companies and consequently they are being forced to buy shorter-dated corporate bonds. Short-dated bonds are less volatile and therefore carry a higher rating for the purpose of solvency calculations." He pointed out t...