Valtion Eläkerahasto (VER), the State Pension Fund of Finland, said it is to invest up to €1bn in the commercial paper (CP) market, as part of a COVID-19 crisis package published by the Finnish government last week.

The buffer for the central government’s staff pension obligations has already started buying up the short-term corporate debt, in an investment process which it said would be gradual with transactions taking place on market terms.

Timo Löyttyniemi, VER chief executive officer, said: “VER has started to increase its investments in commercial paper in Finland.

“The number of commercial papers will be increased at most to €1bn depending on the market situation,” he added.

As of mid-March, Löyttyniemi said, the pension fund had around €150m of CP investments – short-term unsecured corporate debt of less than 270 days.

Were VER to hit the €1bn envisaged, this would, therefore, mean a near six-fold increase in its exposure to this type of lending.

VER said the size of Finland’s CP market had wavered over the past year between nearly €4bn and nearly €6bn, adding that the maximum amount the pension fund would invest in the instruments would correlate to 17-25% of the current total market value.

“On Monday 16 March 2020, the state published its procedures to promote corporate financing. Increasing VER’s investments in the commercial paper markets is a part of this package,” said VER.

The fund’s total investments amounted to €20.6bn at the end of 2019, with €7.7bn of that invested in fixed income.