Committee advances bill letting CAPERS invest in select foreign sovereign debt with tighter safeguards

Senate Bill 232, described in committee as "a CAPERS bill," was advanced out of the Senate Committee on Financial Institutions and Insurance on a voice vote after members adopted an amendment tightening the bill’s eligibility criteria.

Eileen, committee staff, told members the bill would allow CAPERS to buy "United States dollar denominated bonds, notes, debentures, or other similar obligations of a foreign government" if the nation’s obligations are backed by the full faith and credit of that country and meet agreed credit standards. She said the amendment adds Fitch and clarifies ratings language: countries must be rated at least "A minus or better by Standard and Poor's, A3 or better by Moody's, or A minus or better by Fitch" or hold an equivalent investment-grade rating accepted by the NAIC.

The treasurer’s office amendment also inserts a new prohibition requiring that "investment shall only be allowed in a country that has never defaulted on short term or long term obligations," and it limits such holdings to no more than 5% of the cash available to invest. Senator Fagg moved the amendment and later moved the bill as amended out of committee favorably; Senator Gossage seconded both motions.

Committee discussion focused on tightening the bill’s country and security definitions and on rating-service coverage. No roll-call tallies were recorded in the committee transcript; approval was by voice vote. The chair said the bill will be sent to the full Senate.

The committee made no further changes to investment limits or to the rating thresholds during its consideration.

Next steps: SB 232, as amended, will be scheduled for floor action in the Senate.