Bloomberg News

Chile Pension Fund May Unwind $1.25 Billion Hedges, Nomura Says

May 22, 2012

Chilean pension funds may have to unwind hedging positions worth about $1.25 billion under proposals presented on May 18 by the industry regulator, depressing the peso, Nomura Holding Inc. said.

Pension funds will have to hedge at least 50 percent of their foreign fixed-income holdings, and as much of 50 percent of their foreign equity holdings, analysts Tony Volpon, Benito Berber and George Lei said in a note to investors. The current rule stipulates a hedge ratio for the entire fund.

The pension funds’ current hedges are short on the dollar and long on the peso in the forwards market, Nomura said.

To contact the reporter on this story: Sebastian Boyd in Santiago at sboyd9@bloomberg.net.

To contact the editor responsible for this story: James Attwood at jattwood3@bloomberg.net.


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