AMERICA'S LARGEST PENSION FUND RETAINS RP IN ITS INVESTMENT LIST
WASHINGTON, February 2, 2005 (STAR) By Jose Katigbak, STAR Washington Bureau - CalPERS, America’s largest public pension fund, will retain its investments in the Philippines this year, giving the country a big economic boost after international credit ratings agencies had downgraded its sovereign credit rating.
The Philippine embassy in Washington in a press statement on Monday said the country was given a passing score of 2.0 by Wilshire Associates — the consulting firm of the California Public Employees’ Retirement System (CalPERS) – ensuring the country’s retention in the CalPERS’ list of permissible emerging markets.
Ambassador to the US Albert del Rosario attributed the success to the "resolve of the administration of President Gloria Macapagal-Arroyo to institute far-ranging reforms toward strengthening the country’s economic and political foundations."
CalPERS has a threshold score of 2.0 for permissible investment sites.
The embassy announcement came as a surprise since recent credit rating downgrades by Fitch Ratings and Standard & Poor’s had cast doubts about CalPERS continued presence in the Philippines.
CalPERS spokesman Brad Pacheco told The STAR a draft report indicating the fund will continue its investments in the Philippines will be placed before the board in March for a final vote.
He said the draft report was issued to enable countries investigated by Wilshire as viable locations for CalPERS’ portfolio investments to review and comment on it.
"In the case of the Philippines, I’m sure they’ll be happy we’re retaining our investments. But our board won’t take final action until March," he said.
CalPERS, with $172 billion worth of assets, has an estimated $85 million worth of portfolio investments in the Philippines. Its investments span US and international markets.
Wilshire’s score for the Philippines this year was slightly below the 2.12 points it gave the country in 2004. Nevertheless it was still good enough to enable the Philippines to make the 2.0-point cut-off in CalPERS’ list of permissible investment markets.
A combination of seven "country" and "market" factors were used by Wilshire Associates in evaluating the Philippines’ viability as a destination for CalPERS portfolio investments.
"Country" factors were political stability, transparency, and productive labor practices while the "market" factors were liquidity and volatility, market regulation/legal system/investor protection, capital market openness, settlement proficiency/transaction costs.
Trade and Industry Secretary Cesar Purisima said that CalPERS decision is "a continuing vote of confidence in our country," adding that "CalPERS is an opinion leader in the investment community and its vote of confidence augurs well for our capital markets."
Purisima also said that CalPERS decision is "also a vote that confirms the need to follow through and continue with our reform agenda."
Speculation of a possible removal of the Philippines from CalPERS’ list of permissible investment sites surfaced after the country suffered a credit rating downgrade by Standard and Poor’s earlier this month due to the budget deficit and public debt problems.
Fitch Ratings last month downgraded its outlook on the Philippines from "stable" to "negative" citing similar problems.
The government this month reported a 2004 budget deficit of P186.1 billion, well below an official ceiling of P197.8 billion.
The government has been struggling to keep the budget deficit within tough targets in order to avoid a looming fiscal crisis. – With Marianne Go, AFP
Reported by: Sol Jose Vanzi
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