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Strategy: Although the return on state securities increases, pension funds keep their money in bank deposits

The return on the most liquid state securities on the primary market - with a 6-month and a 1-year maturity - continued its strong growth trend in the first seven months of this year, getting closer to 11%, compared to 6%-7% a year and a half ago. However, the mandatory private pension funds continue to prefer bank deposits to the detriment of state securities, taking advantage of the legislative derogation allowing them to invest over 20% of the assets in the monetary market, and keep postponing the investment of most money in state securities.

According to a survey conducted by , the returns of the state securities increased strongly this last year and a half - for the two maturities (6 months and 1 year), with the returns of the most recently issued securities reaching almost 11%. Nevertheless, at the end of June, the pension funds' investments in state securities were almost equal to their bank deposits and other instruments on the monetary market (44% for securities, 43% for deposits). The CSSPP derogation to allow investments higher than 20% on the monetary market expires in less than four months - after this deadline, the funds shall invest approximately 65%-70% of their assets in state securities.

Until then, however, the pension funds keep a large part of the money they collected so far in banks. As the monetary policy interest rate is now 10% per year and many banks offer interest rates higher than 11% per year for the deposits they attract, it seems that pension funds would rather go for placements in banks, to which they add returns higher than 11%, instead of buying state securities on the primary market (or secondary - the returns here are often times similar to the ones on the primary market, give or take several decimals from the base points), with 10% to 11% return rates.

Eventually, in less then four months, the pension funds shall re-focus on state securities. Meanwhile, these instruments shall be listed at the Stock Exchange (beginning with next Monday), and the returns might stay at quite high levels, according to certain investment managers.


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