PPM scheme mulls swaps and eurobonds (amended)
SWEDEN - The Swedish Premium Pension Authority (PPM) is looking at investing in swaps and eurobonds to restock its buffers, according to its head of financial analyses, Sara Bergström.
The newstrategy applies only to PPM's SEK1.7bn with-profits annuity product.
PPM, which is the insurance provider of the Swedish first pillar premium pensions started in 2000, is also in the process of investing in interest rate swaps, after finishing last year with a foray into long duration bonds.
Speaking at the LDI Europe 2009 conference in Amsterdam today, Bergström said the financial crisis has been "quite hurtful" to the fund. (Story on latest PPM figures to follow)
PPM conducted a review of its investments strategy for its bond portfolio during 2008, with the objective of increasing the duration matching between assets and liabilities.
Simultaneously, the insurer found the buffers of the traffic light system, introduced 2006 as a supervisory tool for the Swedish FSA, had declined to SEK153m at the end of October.
"We started a new bond portfolio to increase the duration in two steps," she said, adding in the first stage, PPM invested in long duration bonds.
As a second step, PPM has begun investing in interest rate swaps, adding the fund is also considering eurobonds, specifically so-called supranationals, and swaps.
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