Norway’s Government Pension Fund bought NOK 11.34 Billion worth of Malaysian Government Bonds

Norway’s Government Pension Fund Global, the world’s largest sovereign wealth fund with a market value of about NOK11.08 trillion (RM5.48 trillion), has bought NOK11.34 billion (about RM5.44 billion) worth of Malaysian government bonds on 31 Dec 2020, according to latest updates by the Norwegian central bank’s asset management unit.

“The fund’s fixed-income investments are allocated [with] 70% to bonds issued by governments and related institutions, and 30% to securities issued by the corporate sector.

The investments in government bonds are distributed according to the economic size of a country as measured by its gross domestic product (GDP). Norges Bank Investment Management also considers the strength of a country’s public finances when investing in government bonds.”

Norges Bank Investment Management is the asset management unit of Norwegian central bank Norges Bank, which has been tasked with managing the Government Pension Fund Global, often referred to as Norway’s oil fund, Norse Bank Investment Management said on its website.

According to Norges Bank Investment Management, the majority of the Government Pension Fund Global’s fixed-income investments are in developed countries, with a high percentage of government bonds denominated in the euro, dollar, pound or yen.

Around 10% of the fund’s fixed-income investments are in government bonds in currencies in emerging markets, Norges Bank Investment Management said.

“These bonds generally have an investment grade credit rating,” it added.

For 2019, Norges Bank Investment Management said the Government Pension Fund Global’s Malaysian fixed-income asset investments, comprising only Malaysian government bonds then, rose to NOK16.98 billion from NOK16.96 billion a year earlier.

In US dollar terms, the Government Pension Fund Global’s Malaysian fixed-income asset investments, however, fell to US$1.93 billion in 2019 from US$1.96 billion a year earlier, Norges Bank Investment Management said.

According to Bank Negara Malaysia’s (BNM) website and the edgemarkets report, Malaysian Government Securities (MGS) include the conventional MGS and Islamic-compliant Government Investment Issues (GIIs).

Latest updates by BNM show that the MGS pay an annual interest rate or coupon of between 2.632% and 3.955%.

The three-year MGS pay a coupon of 3.48%, the five-year MGS offer 3.955%, the seven-year MGS pay 3.733% and the 10-year MGS offer 2.632%, according to the central bank.

BNM’s monetary policy committee on March 4, 2021 decided to maintain the country’s overnight policy rate (OPR) at 1.75%, it said in a statement that day.

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