The Association of Mutual Fund Managers is coming out against the Securities Authority – the capital market

A few days ago, the Securities Authority published a draft in which it instructed mutual funds to begin examining bonds of foreign companies according to international ratings, and to stop examining them according to local ratings, following the increase in issues and trading of bonds by foreign companies with no affiliation to Israel.

The draft of the Securities Authority caused the bond prices to fall; Now, the official response of the Association of Fund Managers has arrived: “Implementing the draft directive, and in particular the deadlines set out in it, will lead to a wave of bankruptcies of various companies due to retroactive application to existing companies, after being scheduled for several years. That this was done by surprise.

Mutual fund executives, led by Eli Bavli, are asking the Securities Authority to make changes to the draft, they said, “to prevent damage to mutual fund investors, and to companies in which mutual funds invest. The union sees the draft directive as a change in the “rules of the game” during the “game” – a change in the meaning to be given to the term “non-rated investment bonds”, as proposed in the draft directive, after this term has been widely assimilated in market mutual funds. The many held about him. ”

The Securities Authority has demanded that the bonds of foreign companies that are rated below level AA not be included in the investment rating. Today, foreign companies are ranked by Israeli rating companies according to a local scale and not a global scale. In other words, the rating reflects the credit risk assessment of a debtor in relation to all debtors in Israel only. Those bonds with no affiliation to Israel are ranked locally, despite their global characteristics and the risks associated with their activities. The majority of these companies were incorporated in the British Virgin Islands, (BVI companies) while their activities focused on the United States.