❓ Hon Ken Travers questions the Treasurer's representative about the impact of WA's credit rating downgrade on the WA Future Fund's investment strategy, specifically regarding state government bonds. The answer clarifies that diversification remains a key consideration.
AnsweredQoN 133Legislative Council
QuestionView source ↗
CREDIT
RATING — GOVERNMENT BONDS
133. Hon KEN TRAVERS to the
minister representing the Treasurer:
I refer to the recent downgrading of Western Australia's
credit rating to Aa2.
(1) Will this
mean that the only Australian semi-government bonds that can be purchased in
the future by the Western Australian Future Fund are those issued by the Western
Australian Treasury Corporation?
(2) If no to
(1), what other state government bonds does the Treasurer expect will provide a
higher yield than WA bonds, and why?
RATING — GOVERNMENT BONDS
133. Hon KEN TRAVERS to the
minister representing the Treasurer:
I refer to the recent downgrading of Western Australia's
credit rating to Aa2.
(1) Will this
mean that the only Australian semi-government bonds that can be purchased in
the future by the Western Australian Future Fund are those issued by the Western
Australian Treasury Corporation?
(2) If no to
(1), what other state government bonds does the Treasurer expect will provide a
higher yield than WA bonds, and why?
AnswerView source ↗
I thank the member
for some notice of the question.
(1) No.
Diversification is an important consideration, consistent with the future fund
investment strategy, which factors in total portfolio risk and return. The
current future fund investment portfolio includes holdings of state government
bonds of a number of states.
(2) It is virtually
impossible to predict future yields, as these are determined by a number of
factors such as credit ratings, liquidity and supply. On any particular trade
date, other state semi-government bonds could offer a similar or higher yield
than WATC-issued bonds. For example, as at close of business on 24 February
2016, certain bond lines maturing up to 2021, issued by the Tasmanian Public
Finance Corporation and the Northern Territory Treasury Corporation, offered
slightly higher yields than equivalent Western Australian Treasury Corporation
bonds.
for some notice of the question.
(1) No.
Diversification is an important consideration, consistent with the future fund
investment strategy, which factors in total portfolio risk and return. The
current future fund investment portfolio includes holdings of state government
bonds of a number of states.
(2) It is virtually
impossible to predict future yields, as these are determined by a number of
factors such as credit ratings, liquidity and supply. On any particular trade
date, other state semi-government bonds could offer a similar or higher yield
than WATC-issued bonds. For example, as at close of business on 24 February
2016, certain bond lines maturing up to 2021, issued by the Tasmanian Public
Finance Corporation and the Northern Territory Treasury Corporation, offered
slightly higher yields than equivalent Western Australian Treasury Corporation
bonds.
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