EUROPE - Some of the Netherlands’ biggest pension funds and their asset managers have met the recent downgrade of France and Austria by Standard & Poor’s (S&P) with resignation, saying the move had been largely expected.

Last week, the ratings agency cut the two countries credit ratings by one notch, from investment-grade AAA to AA+. It also cut the ratings of seven other euro-zone countries, including Italy, Portugal and Spain.

But Harmen Geers, spokesman at APG - the €270bn asset manager for civil service scheme ABP - said: “There is no panic here yet. The downgrade is merely one little step from the second-highest rating.”

He said APG had been expecting the downgrade for “quite some time”, although he declined to specify what measures the asset manager had taken.

He pointed out that the markets had also been expecting the ratings agency’s move, “as we can’t see any effects on spreads or credit default swaps”.

However, Geers did say that APG did not consider non-euro AAA bonds as proper alternatives to euro-denominated bonds.

“They usually generate a low yield and also require a currency hedge,” he said. “By investing in German AAA bonds, we get a low return indeed, but we don’t have currency risk.”

Gerda Smits, spokeswoman at the €23bn metal scheme PME, said: “We don’t merely consider ratings alone - we also look at the underlying fundamentals and want to take the spread of our investments into account.

“The present developments indicate that an AAA status is becoming increasingly rare, so it doesn’t make much sense to change investments continuously, following adjusted ratings, in search of the relative safety of the moment.”

The €37bn metal scheme PMT also stressed that the downgrade had not come as a surprise.

Spokeswoman Annemieke Biesheuvel said: “Fortunately, we don’t need to respond to the developments, as we already divested our holdings in French governments bonds some months ago.
“However, as the interest on government bonds from safe countries remains low, we will also benefit from the euro crisis being solved.”

PGGM, the €105bn provider for the €100bn healthcare scheme PFZW, declined to comment on the developments.

Spokesman David Uittenbogaard said: “Any comment will affect our investment position.”