AFP Siembra Eyes Government Bonds

Dominican Republic-based pension fund AFP Siembra is weighing investing 5%-7% of its total portfolio, worth DOP16.6bn ($450m), in local government bonds, says CEO Alvin Martinez. “This is what we would initially invest, but as our cashflow increases we will allocate more funds [to these bonds],” he tells LatinFinance. On March 1, the Dominican allowed local pension funds to invest up to 15% of their total portfolio in local government or government-guaranteed bonds. Local pension funds until now have not had the opportunity to diversify very much. As of December 2009, their portfolios were 56.8% invested in local bank paper, 37.8% in central bank paper and 5.3% in local corporate bonds, according to data from the local superintendent of pension funds and RBS. Dominica pension funds’ portfolios are worth around $3bn.