Inflation-Indexed Bonds: C-Linkers and P-Linkers

The market for inflation-indexed bonds (linkers) has grown enormously in the last thirty years. P-Linkers, for which the coupon rate is fixed and the principal is linked to changes in the consumer price index (ΔCPI), are usually issued by governments. These include U.S. Treasury TIPS (Treasury Inflation-Protected Securities), which have been available since 1997 and borrowed their design from linkers issued in the United Kingdom (1981), Australia (1983), and Canada (1991). C-Linkers are essentially floating-rate notes for which the principal is fixed and the variable coupon rate is linked to the ΔCPI. They tend to be issued by commercial banks and life insurance companies.

While inflation-adjusted ...

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