NETHERLANDS - The €250bn asset manager APG is set to issue index-linked loans to housing corporations in a bid to hedge its risk for inflation in the Netherlands.
Spokesman Harmen Geers said: "We are in discussions with many players, including banks and the large guarantee fund for social housing."
APG is considering housing corporations' demand re-financing as a new market - estimated at approximately €10bn a year - which could in part be served through index loans, Geers said.
He added that APG was also willing to issue index loans for building land, based on inflation-linked long leases.
Housing societies could also take advantage of APG's plan to issue 15 to 20-year loans, rather than loans for a short period, he said.
Geers said the timing was right for such inflation-linked investments, despite inflation being at a modest level.
"We want to be proactive, as these index loans will become more expensive when inflation is increasing," he said.
The spokesman said he could not indicate how much APG had allocated to index loans for housing corporations for "commercial reasons".
However, he noted that APG would encourage other pension funds and asset managers to join in, as this would "help to develop this new market".
Because the Dutch government does not issue inflation-linked bonds, the Dutch market for index loans is limited.
According to Geers, APG has invested €18bn in the inflation-linked bonds of other European governments, as well as €1.5bn in index loans to utility companies and infrastructure.