RP starts new lobby for inclusion in CalPERS list

The government has begun another round of lobby before the California Public Employees Retirement System (CalPERS), asking the board to lower its threshold for investment-grade equity markets.

In a letter to CalPERS, Finance Secretary Juanita Amatong backed the proposal made by the fund’s consultant, Wilshire & Associates, to lower the cuf-off in its point-system from two to 1.5 points.

Documents obtained by reporters indicated that Amatong wanted the threshold score to be lowered because this move would finally qualify the Philippines as an investment-grade market after it was given a 1.87-point score by Wilshire.

The letter was addressed to CalPERS investment committee chairman Rob Feckner, chief executive officer Fred Buenrostro, chief investment officer Mark Anson and portfolio manager Derek Hayamazu.

Amatong’s letter was sent in anticipation of CalPERS‚ Investment Committee Meeting on Feb. 17, 2004 where the final decision will be made on whether the country will be dropped or retained in the investment list.

In the letter, Amatong said Wilshire has upgraded its rating on the Philippines from 1.46 last year to 1.87 but this was still 0.13 short of the CalPERS threshold score of two points.

"If the threshold level is changed to 1.5 which I know Wilshire has recommended in the past, the Philippines would qualify as a permissible equity market for CalPERS," Amatong said in her letter.

Amatong also made a pitch for further upgrades in the country’s rating, citing the recent legislative developments that would improve the investment climate in the country. Amatong said she expected the enactment of the Rationalization of the Documentary Stamp Tax Act that would correct deficiencies in the implementation of the documentary stamp tax on debt and equity instruments.

"By lessening frictional costs such as the DST, the country’s bond market can be further developed and the secondary trading of debt and equity instruments will be expanded," Amatong explained.

Amatong also cited the passage and eventual enactment of the Securitization Act of 2004 as a companion bill to the Special Purpose Vehicle Act of 2002 as well as other laws that partly addressed Wilshire’s concerns.

Former Finance Secretary Jose Isidro Camacho had been aggressive with his lobbying effort, going to California several times to personally meet with the CalPERS board.

According to sources, however, Amatong had no intentions of going to this extent. Since Wilshire released its ratings last week, Amatong had talked to CalPERS only once in a teleconference.