SYDNEY (Dow Jones)--Australia's Future Fund has no plans to buy the debt being issued to rescue ailing eurozone countries as the fund is currently steering clear of sovereign bonds, Chairman David Murray said in an interview.
In an effort to stabilize the heavily indebted peripheral nations, eurozone authorities are issuing debt through a temporary bailout fund, the European Financial Stability Facility, while the European Union itself is also part-funding the rescue.
Klaus Regling, the chief executive of the EFSF, last week said there is strong interest from Asia in the rescue bonds but the Future Fund's Murray said Australia isn't buying.
"We are not holding sovereign bonds at the moment," Murray told Dow Jones Newswires in an interview. "Our current asset allocation and portfolio positioning doesn't attract us to any of (the bailout bonds) at the moment. It's not on our radar," he said.
Murray, who has just completed a two-year term as chairman of the International Forum of Sovereign Wealth Funds, doesn't expect that position to change.
Set up to manage Australia's public sector pension liabilities, around 20% of the Future Fund's 75 billion Australian dollar (US$80 billion) portfolio is dedicated to fixed income securities. It ranks as the world's 13th largest national wealth fund, according to the Sovereign Wealth Institute.
The European Union last week issued EUR9.5 billion of bonds to support Ireland and Portugal with strong buying from Asian investors including reserve managers and more hefty issuance is planned.
While a restructuring of some kind by Greece is a likely scenario, the disruption to the markets may not be as severe as some predict, Murray said.
"Whether you call it a default or something else is somewhat irrelevant. I believe that has just got to happen," Murray said. "The market probably wouldn't feel too much because it's not stressed at the moment by some other factors."
Some Europe-based policy makers have warned a Greek restructuring could trigger market disruption on the scale of that witnessed after the failure of Lehman Brothers in 2008.
Germany is considering dropping its push for a rescheduling of Greek bonds in order to facilitate a new package of aid loans for Greece, The Wall Street Journal reported Tuesday.
On the strength of the Australian dollar, which continues to trade well above parity, Murray said the fund's investments are well protected. "We've remained pretty strongly hedged. We remain pretty well covered by what's happened to date," Murray said.
Source: http://online.wsj.com
In an effort to stabilize the heavily indebted peripheral nations, eurozone authorities are issuing debt through a temporary bailout fund, the European Financial Stability Facility, while the European Union itself is also part-funding the rescue.
Klaus Regling, the chief executive of the EFSF, last week said there is strong interest from Asia in the rescue bonds but the Future Fund's Murray said Australia isn't buying.
"We are not holding sovereign bonds at the moment," Murray told Dow Jones Newswires in an interview. "Our current asset allocation and portfolio positioning doesn't attract us to any of (the bailout bonds) at the moment. It's not on our radar," he said.
Murray, who has just completed a two-year term as chairman of the International Forum of Sovereign Wealth Funds, doesn't expect that position to change.
Set up to manage Australia's public sector pension liabilities, around 20% of the Future Fund's 75 billion Australian dollar (US$80 billion) portfolio is dedicated to fixed income securities. It ranks as the world's 13th largest national wealth fund, according to the Sovereign Wealth Institute.
The European Union last week issued EUR9.5 billion of bonds to support Ireland and Portugal with strong buying from Asian investors including reserve managers and more hefty issuance is planned.
While a restructuring of some kind by Greece is a likely scenario, the disruption to the markets may not be as severe as some predict, Murray said.
"Whether you call it a default or something else is somewhat irrelevant. I believe that has just got to happen," Murray said. "The market probably wouldn't feel too much because it's not stressed at the moment by some other factors."
Some Europe-based policy makers have warned a Greek restructuring could trigger market disruption on the scale of that witnessed after the failure of Lehman Brothers in 2008.
Germany is considering dropping its push for a rescheduling of Greek bonds in order to facilitate a new package of aid loans for Greece, The Wall Street Journal reported Tuesday.
On the strength of the Australian dollar, which continues to trade well above parity, Murray said the fund's investments are well protected. "We've remained pretty strongly hedged. We remain pretty well covered by what's happened to date," Murray said.
Source: http://online.wsj.com
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