The National Pension Commission (PenCom) has issued additional requirements for investing in Commercial Papers (CPs) by Pension Fund Administrators (PFAs) in line with its commitment to enhancing risk management in the investment of pension funds.
The Commission highlighted that Pension Fund Administrators (PFAs) shall invest pension funds in CPs issued by corporate entities with a valid minimum credit rating of ‘A’.
Giving exceptions for entities with lower credit ratings, PenCom stated that “Investments in CPs issued by corporate entities with a credit rating of ‘BBB’ may be considered if such CPs are guaranteed by: An agency backed by a sovereign entity.
“A Multilateral Development Finance Organisation (MDFO) with a minimum credit rating of ‘A’; or a Commercial Bank with a minimum credit rating of ‘A’.”
The Commission advised licensed Pension Fund Administrators (PFAs) to comply with these requirements strictly, and also emphasised the need for robust internal controls and documentation to prove compliance.
PenCom noted that the additional requirements follow its circular (Ref: PenCom/TECH/ISD/2024/403) dated 3 December 2024, which underscored the importance of due diligence in evaluating prospectuses and offer documents related to Commercial Papers (CPs), as stipulated in Section 29 of the Regulation on Investment of Pension Fund Assets.
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