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Mexico Hedges Oil Revenues in 2012, Uses Put Options

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Mexico is a country that is economically dependent on its petroleum industry. Revenue volatility from one budget to the next, as business cycles tend to coincide with oil cycles, and the proficient use of oil revenues increases remain significant challenges for Mexico. Also, Mexico must deal with the scenario of decreased oil revenues as production is in steady decline and proven reserves are shrinking.  The Government of Mexico has purchased put options at the US$ 85 a barrel level. This is to protect Mexico’s finances in case of a potential drop in the average price. The put options may be exercised in the event Mexico’s basket of export crude treads below an average of US$ 85 a barrel. This is nothing new as comparable hedging strategies have been used in the past to protect against oil price volatility.

The oil coverage program is applied through Mexico’s Oil Revenues Stabilization Fund.

In 2010, the Government of Mexico hedged at US$ 57 a barrel at a cost of over US$ 1 billion. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

BlackRock Contemplates Stake in Eurizon

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Asset management giant BlackRock is contemplating purchasing a 30% ownership stake in Intesa SanPaolo’s asset management unit called Eurizon Capital SGR S.p.A. BlackRock is keen on growing its technology business and increase market adoption of its Aladdin platform.

Intesa has been working with UBS to seek out strategic options for Eurizon. Intesa is keen on maintaining control over Eurizon.

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SWFI First Read, June 22, 2018

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JPMorgan Fund Buys 40% of Oxford Properties’ French Portfolio

A fund advised by JP Morgan Asset Management committed €400 million in Oxford Properties’ French portfolio. Essentially, Oxford Properties sold a 49.9% non-managing interest in 32 Rue Blanche, 92 Avenue de France and Paris Bastille. Oxford Properties made its maiden investment in Paris in 2014 when it acquired 32 Rue Blanche.

Oxford Properties is the real estate unit of OMERS.

Temasek Explores Further Cash Commitments to FirstCry

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DOL Fiduciary Role is Struck Down by Fifth Circuit Court of Appeals

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The U.S. Court of Appeal, Fifth Circuit, confirmed a March 15th decision to strike down the U.S. Department of Labor’s (DOL) fiduciary rule. The fiduciary rule is a series of seven different rules that broadly interpret the term “investment advice fiduciary” and redefine exemptions to provisions concerning fiduciaries that appear in the Employee Retirement Income Security Act of 1974 (ERISA). The 5th U.S. Circuit Court of Appeals overturned a decision by a Dallas federal court that had upheld the DOL fiduciary rule.

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