Romanian private pension funds to invest more in shares, corporate bonds

Romania’s Financial Supervisory Authority (ASF) plans to review the investment policy restrictions for local private pension funds in order to allow them to invest more of their portfolios in shares and corporate bonds listed on the capital market. This would allow private pension funds, which gather contributions from some 6 million Romanians, to have a higher contribution in financing the local economy, according to ASF.

Data centralized by ASF shows that private pension funds have invested some EUR 617 million in companies listed on the Bucharest Stock Exchange (BVB). They placed more than EUR 150 million in the public offerings conducted by the Romanian state in the last two years, which is almost a fifth of the total sums that were raised in these transactions.

The acquisitions made by pension funds include shares worth EUR 66 million in electricity distributor Electrica (BVB ticker: EL), which represent more than 7.5 percent of the company’s capital, and shares worth EUR 57 million in natural gas producer Romgaz Medias (SNG).

In total, pension funds held shares worth some EUR 216 million in state controlled companies, as of June 30, 2014. These include gas transport company Transgaz (TGN), electricity transport company Transelectrica (TEL), electricity producer Nuclearelectrica (SNN) and pharmaceutical producer Antibiotice Iasi (ATB).

At the end of March, 2014, private pension funds were managing more than EUR 3.55 billion, which is 2.36 percent of Romania’s GDP. Mandatory private pension funds, which make the second pillar of the pension system in Romania, had EUR 3.36 billion under management, two thirds of which were invested in state bonds. Investments in shares were 15.65 percent of the total portfolio, corporate bonds were 4.33 percent and bank deposits were 7.07 percent.

Optional pension funds, the so called third pillar, had assets under management of EUR 191 million, with slightly higher investments in shares and corporate bonds. Shares were 18.4 percent of the portfolio and corporate bonds were 5.1 percent.

Andrei Chirileasa, [email protected]

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