Rothschild and EDHEC-Risk Institute set up a research chair on inflation-linked corporate bonds

EDHEC-Risk Institute and Rothschild have announced the creation of a research chair entitled ‘The Case for Inflation-Linked Corporate Bonds: Issuers’ and Investors’ Perspectives’.

The purpose of the research chair is to support research undertaken at EDHEC-Risk Institute on the benefits of inflationlinked corporate bonds both from the issuers’ as well as from the investors’ points of view. The chair will also focus on contrasting the analysis, in corporate finance, and perceptions of inflation-linked corporate bonds both by issuers and investors. The chair is led by Lionel Martellini, scientific director of EDHEC-Risk Institute.

According to Professor Martellini, “While a dominant fraction of inflation-linked debt is issued by sovereign states, there has been recent interest amongst various state-owned agencies, municipalities and also corporations, in particular from the utility, financial-services and real estate sectors, to issue inflation-linked bonds. On the supply side, intuition suggests that if a given firm's or a municipality’s revenues tend to grow with inflation, then inflation-linked issuance is naturally hedged through evolution of revenues. On the demand side, strong interest is expected as inflation hedging has become a concern of critical importance for pension funds with inflation-linked liabilities, and for private investors, who consider inflation as a direct threat with respect to the protection of their purchasing power.”

Jean-Louis Laurens, Managing Partner and CEO of Rothschild & Cie Gestion, said, “This partnership with EDHEC-Risk Institute will allow for in-depth analysis of inflation-linked corporate bonds, which is an area of crucial importance both corporate bond issuers on one hand, and institutional and private investors on the other. By sponsoring EDHEC-Risk Institute, Rothschild wishes to support initiatives which lead to genuine improvements in techniques and knowledge throughout the industry. This is done in conjunction with our colleagues of the debt advisory department”.

“We look forward to studying the role of inflation-linked corporate bonds in optimal liability management decisions and the benefits of sovereign, municipal and corporate inflation-linked bonds in long-term investment decisions as part of the Rothschild research chair. We also look forward to conducting a comprehensive European survey in order to compare and contrast issuers’ and investors’ perceptions about inflation-linked corporate bonds” concluded Noël Amenc, Director of EDHEC-Risk Institute.