UPSF informs of procedure for new investments
Earlier this month, Governor of the National Bank Daniyar Akishev said that the Fund will make investments into financial instruments of banks and corporate issuers of Kazakhstan.
"In this case, this refers to investing in second-tier banks instruments on arm's length basis. These will be extremely reliable banks, i.e. will set criteria for such investments. The total amount is expected to be KZT 200 billion, and it is planned to perform issuance equal to that amount. In this case, the National Bank intends to establish conditions that UPSF will not participate in the redemption of bonds for 100% of the bond issue. That means that other creditors should be attracted for not less than half of the amount, and the UPSF's money resources will be used for about half. But, this will not be a one-time issue but a gradual one. There are strict criteria for the banks that can participate in such programs. And most important is that investment will be carried out on arm's length principle, like all other pension assets investments," Saule Yegeubayeva clarified.
The list of the banks where the Unified Pension Savings Fund's assets will be invested has not yet been available. However, the management team of the Fund does not expect any new problems related to the repayment of the invested assets.
"In accordance with Article 35 of the Law on Pensions, the National Bank carries out trust management of the pension assets. Starting in 2016, the investment policy has undergone substantial changes, and the Bank has set clear criteria, strict limits, which are currently observed, as well as the requirements for ratings of issuers and financial instruments invested by using pension assets," said Saule Yegeubayeva.
As of May 1, the amount of the pension assets debt is KZT 41 billion, which is about 0.5% of all of the UPSF's pension assets. Moreover, one of the shareholders of Central-Asian Power Energy Company JSC, a company whose bonds are also available in the portfolio of the UPSF, has been recently detained for two months.
"As soon as an asset gets troubled, the National Bank conducts its own analysis and takes measures to prevent default situations within a period of 30 days. After that time, it conveys all the materials to the Unified Pension Savings Fund, and we are already starting to work with the troubled issuer by letters before claim, demand a refund when there are grounds for demanding debt collection. All situations preceding a default are assessed and considered. If possible, the instrument is sold. The pattern of interaction between the National Bank and the UPSF works, and we make every effort to ensure that none of Kazakhstani tenges of the pension assets is lost," Saule Egeubaeva assured.
In addition to the above, 30% of the instruments, where UPSF assets are invested, are foreign exchange-denominated. Presently, the share of assets invested in instruments, which were issued by foreign issuers, is about 21%, while the remaining 9% accrue to local issuers whose instruments are foreign exchange-denominated. In total, pension assets (the total amount of savings) amount to KZT 8.13 trillion.