MPF set to target treasury bonds

Finance | Victor Zhong 20 Oct 2021

Bonds issued by the central government and policy banks are likely to be new investments for the Mandatory Provident Funds but not local government debts with higher uncertainties.

The Mandatory Provident Fund Schemes Authority is studying whether the current investment guidelines can be relaxed to introduce sovereign ratings as the rating of the national debt, said acting managing director and executive Cheng Yan-chee. The study will be completed by the end of the year.

The existing regulation only allows MPFs to invest in bonds with a credit rating of at least BBB-. However, the market generally uses the sovereign rating of the bond-issuing country to determine the rating of the relevant national debt. Therefore, national debts are generally not rated.

China's national bond will not be the only candidate but all treasury bonds, said Joseph Lee, director of Product Regulation at the MPFA.

Meanwhile, MPF trustees and sponsors will provide simplified Mandatory Provident Fund disclosure that is no longer than eight pages to members by the end of June next year, said the authority.

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