City Of London
Pension Funds at Center of Gilt Rout Get New Way to Tap BOE Cash
- BOE’s repo facility will lend against wider range of assets
- Pensions have sold assets recently to build cash buffers
City workers walk near the Bank of England in the City of London, UK.
Photographer: Carlos Jasso/BloombergThis article is for subscribers only.
The Bank of England will lend against a wider range of assets, including corporate bonds, in a fresh measure to try to avoid the vicious cycle that hit UK pension funds in recent weeks.
The BOE said Monday it will launch a Temporary Expanded Collateral Repo Facility, or TECRF, that will run until Nov. 10 to help banks ease pressure on the so-called liability-driven investment strategies that many pensions use. Banks could therefore accept more types of assets as collateral from the LDI funds and turn to the BOE to convert those assets into cash.