Recent inflation forecasts have been proved to be inaccurate. Investors are increasingly concerned as to whether their investments will beat inflation and whether they will be able to match their own inflation linked obligations in the future. Index-linked bonds can provide a solution to this uncertainty by linking the principal amount owed to inflation.
Increasing demand from investors for this type of product may increase the issuance of index-linked debt from organisations that have inflation linked income streams, such as local authorities, utility companies, and housing associations.(more…)