Liquidity needs in fixed income: How the Mini Budget changed the game

Absolute return and multi-class credit

The last week of September saw the announcement of a fiscal package in the UK that led to forced selling of fixed income assets, driven by outflows from pension fund accounts that were subject to LDI collateral calls.

Following these events, Redington has seen a significant increase in liquidity needs from pension fund clients, triggering related questions among other asset owners and intermediaries over their own fixed income exposures. This is happening across the whole spectrum of fixed income sub-asset classes, but for the purposes of this article, and given the large amount of capital allocated across them, we are going to focus on two: absolute return credit and multi-class credit (MCC). Both asset classes tend to have a sizeable exposure to emerging market debt securities, determined by the ...