Pension funds can participate in trading sessions for new state securities on May 22nd and 28th
The mandatory private pension funds (pillar II), to collect the first money from the contributions on the 20th of May, can buy newly issued state securities (on the primary market) on May 22nd and 28th, according to the issuing calendar published by the Ministry of Economy and Finance. On May 22nd, the Ministry shall organize a trading session for securities with a five year maturity, amounting to RON 100 million (EUR 27.4 million), and on May 28th, for one year maturity securities, with a value of RON 200 million (EUR 54.8 million).
According to certain estimations, the mandatory private pension funds shall receive a total volume of contributions between EUR 25 and 30 million on the 20th of May, of which approximately two thirds shall be invested in state securities, namely between EUR 16.7 and 20 million. Obviously, the pension funds are competing against the banks and other players for buying these state securities on the primary market.
To buy these securities, the pension funds (and the other interested players) must submit their offers - estimated as competitive by the Finance, which can also reject the offers and cancel the trading session.
According to the law, the mandatory pension funds have only two days to decide, between the transfer moment and the conversion of the money into fund units, namely buying financial instruments. Theoretically, the pension funds can be active and buy in both sessions - on May 22nd and 28th - depending on their investment need.
In fact, the funds can trade on any given day on the secondary market (interbanking) of state securities, where they can buy these instruments to complete their portfolios. In April, the liquidity average on this market was 17 transactions per day, and the daily traded volume was RON 51.5 million (EUR 14.1 million).
State securities are the most important instruments for the mandatory pension funds, representing about two thirds of the market’s prototype-portfolio. Therefore, fund administrators focus first and foremost on this market.
