14 Jun 2018
Legal & General strikes pensions and loan deal with Heathrow
Legal & General Group's recent announcement of a £325 million buy-in with BAA Pension Scheme has been described as "a good match for the long-term" in the Financial Times.
Following a recent announcement from Legal & General Retirement Institutional, this innovative bond, featuring index linkage which switches from RPI to CPI, provides a valuable asset for Legal & General’s £60 billion annuity book and allowed Heathrow to strengthen further their long-term, global financing platform at very competitive pricing for the benefit of its passengers and airline customers.
Under the deal with Heathrow, Legal & General will take on £325 million of pension promises covering 1,300 retired pension scheme members. It will also lend Heathrow £160 million via a bespoke, unlisted corporate bond.
The bond is long-dated, lasting 40 years, and is linked to inflation. That makes it a good match for the long-term, inflation-linked liabilities that Legal & General is taking on, and so has allowed the insurer to cut the price of the buy-in deal.