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NBIM Proposes Major Changes to SWF Bond Portfolio

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Yngve Slyngstad

Norges Bank penned a letter to Norway’s Ministry of Finance, “Letter to the Ministry of Finance, 1 September 2017”.

The letter essentially recommended four major changes to the Norway Government Pension Fund Global’s (GPFG) fixed income portfolio.

Four Recommendations.

1. The Bank recommends that a specific currency list is drawn up for the bond index. The currency list must ensure that the index is liquid and investable for the fund. The currency list should consist of US dollars, euros and British pounds.

2. The Bank’s recommendation is that the benchmark index for bonds should comprise nominal government bonds issued in currencies on a currency list.

3. The maturity of the bond index should be managed. We recommend setting an upper limit for maturity of around ten years for bonds included in the index. A shorter maturity will help reduce uncertainty about the fund’s volatility.

4. A portfolio equal to the current bond index is sufficiently liquid given the fund’s liquidity needs. The Bank’s recommendations in this letter may improve liquidity further, and so we believe that there is no need to amend the management guidelines in this area.

Source: Letter to Ministry of Finance, 1 September 2017.

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GIC Supports CapitaLand Shanghai Investment on Haimen Road

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GIC Private Limited, Singapore’s sovereign wealth fund, has entered into a 50:50 joint venture with Raffles City China Investment Partners III (RCCIP III), a fund controlled by CapitaLand. The joint venture is acquiring Shanghai’s tallest twin towers for an aggregate consideration of RMB 12.8 billion (US$ 1.84 billion). The property is located in Shanghai’s core Central Business District.

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Wells Fargo Could be Slimming Down, Possible Retirement Unit Sale

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Wells Fargo (WFC) is looking to exit the retirement plan servicing market, for a potential sale price of US$ 1 billion. The unit is involved in record-keeping, custody, trust details and various other retirement plan services for corporations. It is housed under the Wealth and Investment Management unit. The retirement plan servicing market is not particularly compelling for the bank, especially in light of the U.S. Department of Labor’s newer regulations to force managers to disclose compensation arrangements and fees to plan fiduciaries. Wells Fargo has been lauded for its loyal consumer base and high revenue, and doesn’t require the business, though recent scandals have been a drag on the company’s profitability and public image. This news has pre-empted some advisors to jump ship. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Mubadala Petroleum Signs Deal to Buy Interest in Nour North Sinai Offshore Area Concession

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Mubadala Petroleum, a division of Mubadala Investment Company, signed a deal to acquire a 20% percent participating interest in Egypt’s Nour North Sinai Offshore Area concession. The seller of the interest is a subsidiary of the Italian energy giant Eni. Eni holds an 85% stake in the partnership with Tharwa Petroleum Company, which holds a 15 percent interest. Formed in 2004, Tharwa Petroleum Company is 100% owned by the Egyptian government through a variety of state-owned entities such as the Egyptian General Petroleum Corporation (EGPC) at 20% and Egyptian National Gas Holding Company (EGAS) at 20%.

The sales transaction is subject to conditions, such as approval from government authorities in Egypt.

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