DUBLIN (Dow Jones)--Ireland said Wednesday that assets in its National Pensions Reserve Fund, or NPRF--a mini sovereign wealth fund--have been reduced to EUR5.27 billion after the government was forced to sell down its market investments in its "discretionary fund" to help rescue the country's two major banks.
The NPRF said it now holds EUR15.5 billion worth of assets transferred into its so-called "directed fund" that has been earmarked to support Bank of Ireland PLC and Allied Irish Banks PLC, major lenders that required billions of euros of government aid amid the country's debt crisis. The directed fund assets include shares in the two banks and other rescue monies.
As part of a bailout deal struck in November with the European Union and the International Monetary Fund, Ireland was required to cover part of the bank recapitalization costs and some of its own budget deficits by raiding the pensions fund.
Wednesday, the NPRF said it liquidated EUR10 billion of assets invested in global stock and debt markets in the first half of 2011 that it held in the discretionary fund to help toward meeting the EUR17.5 billion Ireland is required to contribute to refinancing its own bailout.
The value of the directed fund fell 9.1% in the second quarter of 2011 from the corresponding period in 2010, and has fallen over 25% since the start of this year because stock prices of Allied Irish and Bank of Ireland fell during that period, it said.
Meanwhile, investment returns on the EUR5.3 billion discretionary fund fell 0.7% in the second quarter from the corresponding period in 2010, and are down 0.3% since the start of the year, the NPRF said. That compares with an average annual 3.3% return since the pension fund was set up in 2001.
The NPRF also said Wednesday that it decided last month to reduce the discretionary fund's exposure to listed companies around the world by EUR500 million "due to concerns around current macroeconomic stresses and their potential to significantly impact on the value of equity markets."
It has bought two-year "put options" that provide insurance against a fall in the value on most of its remaining EUR1.7 billion stock market investments. At the end of June, the discretionary fund also had over EUR1.31 billion worth in cash and euro-zone government debt, and EUR2.1 billion in private equity, commodities and other alternative assets.
Source: online.wsj.com
The NPRF said it now holds EUR15.5 billion worth of assets transferred into its so-called "directed fund" that has been earmarked to support Bank of Ireland PLC and Allied Irish Banks PLC, major lenders that required billions of euros of government aid amid the country's debt crisis. The directed fund assets include shares in the two banks and other rescue monies.
As part of a bailout deal struck in November with the European Union and the International Monetary Fund, Ireland was required to cover part of the bank recapitalization costs and some of its own budget deficits by raiding the pensions fund.
Wednesday, the NPRF said it liquidated EUR10 billion of assets invested in global stock and debt markets in the first half of 2011 that it held in the discretionary fund to help toward meeting the EUR17.5 billion Ireland is required to contribute to refinancing its own bailout.
The value of the directed fund fell 9.1% in the second quarter of 2011 from the corresponding period in 2010, and has fallen over 25% since the start of this year because stock prices of Allied Irish and Bank of Ireland fell during that period, it said.
Meanwhile, investment returns on the EUR5.3 billion discretionary fund fell 0.7% in the second quarter from the corresponding period in 2010, and are down 0.3% since the start of the year, the NPRF said. That compares with an average annual 3.3% return since the pension fund was set up in 2001.
The NPRF also said Wednesday that it decided last month to reduce the discretionary fund's exposure to listed companies around the world by EUR500 million "due to concerns around current macroeconomic stresses and their potential to significantly impact on the value of equity markets."
It has bought two-year "put options" that provide insurance against a fall in the value on most of its remaining EUR1.7 billion stock market investments. At the end of June, the discretionary fund also had over EUR1.31 billion worth in cash and euro-zone government debt, and EUR2.1 billion in private equity, commodities and other alternative assets.
Source: online.wsj.com
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