BSP Reviews Investments In ABF

MANILA, Philippines -- The central bank is reviewing its investable foreign assets which are placed in the Asian Bond Fund (ABF) in view of the regional move to boost market funds and capital.

Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa C. Guinigundo said the BSP is maintaining its $200 million investments in the $2 billion Asian Bond Fund but this amount is subject to regular reviews and could be increased when the time is ripe for it.

''No plans of raising the amount yet,'' said Guinigundo. ''But these things are subject to change in the future because (BSP foreign investments) are growing and earning money.''

The BSP is investing $100 million each in the two Asian Bond Fund, or ABF1 and ABF2.

The ABF includes the EMEAP (Executives' Meeting of the East Asia-Pacific Central Banks) ABF1 which have exposures in a basket of dollar-denominated bonds issued by sovereigns in Asia, and the ABF2 which is a Pan Asian bond fund with several single market funds or bond exchange traded indices.

The BSP has investable funds worth $63.9 billion as of April this year, lower than the $66.3 billion recorded in January. At the end of 2010, the BSP was investing $300 million in the ABF.

The BSP is also reviewing the benefits of investing in emerging market debt (EMD) in terms of yields and its pluses as an asset class.

BSP expressed concern however about the constraints to investing in EMD, such as that EMD currencies are not considered as reserve eligible, which means that making additional investments in EMD will not be considered part of the country's $76.5-billion gross international reserves.

The BSP first has to recognize these currencies as reserve eligible but noted that investing in global EMD would still entail extra returns for the BSP's portfolio.

The central bank's treasury department has been reviewing various ways to enhance the country's asset portfolio.

Options that are being considered include plans to invest $300 million additional funds to existing ABF or the new bond fund by the Bank for International Settlements, and another $200 million in inflation-linked bonds or treasury inflation protected securities.

Inflation-linked securities are considered attractive because of its low correlation with other traditional asset classes. These bond funds also preserve the real value of capital in the event of inflation.

The BSP's Monetary Board regularly reviews policy and guidelines for its external fund management, especially exposures in derivatives such as futures, options and swaps, whose value was based on an underlying asset, index or reference rate.

Editor’s note:Yahoo Philippines encourages responsible comments that add dimension to the discussion. No bashing or hate speech, please. You can express your opinion without slamming others or making derogatory remarks.

  • Hugas Dugo VERA Files - The Inbox
    Hugas Dugo

    Text by Kimmy Baraoidan Photos by Chris Quintana and Kimmy Baraoidan PAKIL, Laguna--In the small town of Pakil, Laguna resides a group of men who call themselves Hugas Dugo. Most members of the group are residents of the town, who, … Continue reading → …

  • Lenten procession more than just a spectacle VERA Files - The Inbox

    Text and photos by Kiersnerr Gerwin Tacadena, VERA Files Baliuag, Bulacan--This town is hosting what could be the country’s biggest Lenten procession consisting of more than 100 religious statues riding on carriages or carrozas. But concerns are being raised that … Continue reading → …

  • Holy Week in Mt Banahaw: Mysticism meets Catholicism VERA Files - The Inbox

    Text and photos by Patricia Isabel Gloria, VERA Files Dolores, Quezon—Around this time each year, hundreds of devotees flock to Barangay Sta. Lucia in Dolores, Quezon on the slopes of Mount Banahaw to celebrate Holy Week. Here, mysticism meets Catholicism, … Continue reading → …

POLL
Loading...
Poll Choice Options