Inflation-indexed securities

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Inflation-indexed securities

Securities such as bonds or notes that guarantee a return higher than the rate of inflation if the security is held to maturity.

Inflation-Indexed Securities

A bond or other fixed-rate security with an interest rate that varies according to inflation. An inflation-indexed bond, for example, may pay a fixed coupon plus an additional coupon with the amount adjusted every so often according to some inflation indicator, such as the Consumer Price Index. If these securities are held to maturity, then the investor guarantees that the return will exceed the rate of inflation. Inflation-indexed securities exist to provide a low-risk investment vehicle in which the return is guaranteed not to fall below the rate of inflation. See also: I Bond.
References in periodicals archive ?
We are pleased to add to the global diversity of the CPAA:18 Global portfolio with the acquisition of this solid cash flow generating asset with a triple net-lease structured to provide inflation-indexed returns."
Although the popular press often labels inflation-indexed bonds as "exotic securities," nothing could be farther from reality.
18726), Richard Clarida derives a structural relationship between the nominal exchange rate, national price levels, and observed yields on long maturity inflation-indexed bonds.
Spain must cut the public shortfall from 8.9 percent of gross domestic product to 4.5 percent in 2013, however economists fear inflation-indexed pension hikes could make that target impossible as prices rise.
The topics discussed include rediscovering the macroeconomic roots of financial stability policy, inflation-indexed bonds and the expectations hypothesis, the economics of credit default swaps, equilibrium in the initial public offering market, and carry trade and momentum in currency markets.
The inflation-indexed bond, which carries a coupon of 4.375%, is part of a liability management transaction aimed at strengthening the sovereign's external debt profile.
One is the spread between nominal Treasuries and inflation-indexed Treasuries, and the other is inflation swap rates.
The Ministry of Strategy and Finance has announced plans to spur trading in inflation-indexed government bonds, as part of an effort to diversify the Korea Treasury Bond (KTB) market.
The company has issued USD79m in inflation-indexed, 10-year bonds at a yield of 3.45 percent, and USD59.3m in inflation-indexed 25-year bonds at a yield of 3.73 percent.
The Statistical Service said that this was partly due to the (inflation-indexed) Cost of Living Allowance (C.O.L.A.) on the gross earnings of employees, which resulted in the decrease of salaries by 1.44% from July 2009.
Treasury Inflation-Protection Securities were first issued in January 1997 and are currently available in the form of 5-year, 10-year, and 30-year inflation-indexed notes.
It was a rare case that gave the diehard advocates of the inflation-indexed wage adjustment mechanism (ATA) a bitter taste of their own medicine: salaries subject to ATA suffered a decrease (albeit a bearably noticeable one) rather than the typical increase imperceptibly enjoyed for the last 26 years.