Long-Bond Liquidity Trap Sends Denmark’s Top Fund Down Curve
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Denmark’s biggest pension fund, ATP, says the burden of regulatory restrictions designed to rein in risky trades has now led it to abandon its reliance on the longest-dated bonds.
The fund, based north of Copenhagen, said earlier this week it was shortening interest rate guarantees to savers amid a lack of liquid assets with maturities of 30 years and longer. Policy holders will now have the rates paid on their savings guaranteed for 15 years at a time, versus lifelong guarantees. ATP said the change will help protect pensioners’ purchasing power.