APG hails mortgage bonds after government OKs guarantee
NETHERLANDS – The Netherlands has confirmed it is prepared to guarantee mortgage bonds after its Treasury concluded that such guarantees would be possible without increasing risks for the Dutch state.
The news was welcomed by the €292bn civil service scheme ABP and its asset manager APG, which told IPE sister publication IP Nederland that Dutch pension funds and the government were now "in tune" on the issue.
In July, ABP chairman Henk Brouwer had voiced optimism about consultations between the Cabinet and institutional investors on the possible establishment a national mortgage institute (NHI).
Pensions funds wanted guarantees from the government, but the Treasury was reluctant.
APG's Tjerk Kroes, chairman of the working group that fleshed out the NHI, is expected to present details on the agreement between the government and pension funds on 17 September.
Harmen Geers, spokesman for APG, said pension assets in "double-digit billions" could be invested in mortgage loans.
"A new asset class is being created that could be an alternative for government bonds and credit," he said.
At year-end, ABP had invested €50bn in euro-denominated government bonds.
However, mortgage bonds could also function as a substitute for credit, which at APG includes asset-backed securities such as credit card loans.
For its part, ABP pointed out that any potential NHI was still subject to approval by the European Commission.
By the same token, the Treasury and Ministry of Economic Affairs confirmed they were having "constructive discussions" with institutional investors on the subject, but said several details still needed to be fleshed out.