We explore how buy and maintain credit offers pension schemes a cost-effective and accessible way to help increase cash inflows over the short and medium-term.
As defined benefit pension schemes continue to evolve and mature, there is an ever-increasing demand for asset classes that can assist pension schemes in meeting their short and medium-term cash flows in an accessible and cost-effective way. One such investment opportunity is buy and maintain (“B&M”) credit.
B&M credit strategies typically invest in high quality investment grade (“IG”) corporate bonds, with the intention of holding the bonds to maturity. The income and principal repayments that arise throughout the term of the holding period are then paid back to investors, creating a stream of income payments that can be designed to coincide with the timing of benefit outgo and other expenses.
The evolution of the B&M credit market over recent years means that the vast majority of pension schemes can now easily access such arrangements with a wide range of investment providers, offering pension schemes a cost-effective and low governance method of increasing cash inflows.
Download Buy and maintain credit - investment case to find out more.