medium · Debt Capital Markets
A 30-year bond is issued by a sovereign. A 'liability-driven' investor (LDI), such as a pension fund, is the most likely buyer. Why?
- They need long-dated assets to match the long-term nature of their future payment obligations.
- They prefer instruments with the shortest possible duration to minimize price volatility.
- They are seeking high-yield speculative returns to maximize short-term fund growth.
- They are required by regulation to hold only zero-coupon instruments in their portfolios.
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