CFM92425 | Debt cap: the available amount: debt linked to an index

This guidance applies to worldwide group periods of account ending before or straddling 1 April 2017.

Index linked debt

Groups which have income streams that are linked to returns on the retail price index (RPI) may issue index linked debt to hedge against RPI volatility. Typically index linked debt will have a low interest rate but either the redemption price will be adjusted or further payments will be made to reflect changes in the RPI over the period of the debt.

Where the interest element and the RPI-linked components of indexed linked debt are accounted for separately under the effective interest rate method in the worldwide group’s consolidated accounts, both amounts should be included within the available amount.