Of the more than $12 billion in assets that SBCERA invests, our position size with the Province of Buenos Aires is approximately $14 million, which is just over one-tenth of one percent of SBCERA’s total portfolio.
In April 2020, the Province of Buenos Aires stopped making scheduled debt payments, including those owed to GoldenTree Asset Management. Since that time, GoldenTree has repeatedly attempted to engage in good faith discussions with the Province regarding these missed payments, leading to no resolution.
In response, GoldenTree Asset Management is using litigation to enforce their (and SBCERA’s) rights as a creditor and as a driver for the next steps in the process. GoldenTree named SBCERA as a plaintiff in this case in order to maximize value for the position as a fiduciary to the account. Had SBCERA not been named as one of the plaintiffs alongside the creditor group, SBCERA could potentially be treated differently in a workout situation and might not be entitled to certain benefits that could arise out of a settlement of the suit.
The Bottom Line
SBCERA is financially stable to not only pay promised benefits, but we continue to strategically invest in sectors and assets that have a strong return. We want to reassure you that despite this litigation, your pension has mechanisms and strategies to protect your lifetime benefit, now and in the future.
We want to be clear that SBCERA has an investment strategy that focuses on income and we have built an investment portfolio designed to generate positive returns over decades — rather than days, weeks, or months.
SBCERA has made a strong recovery since a tough fiscal year end result in June 2020. Already in the new fiscal year, we’ve seen a 22% return through February 2021. A number of factors played a part, including the Fund’s delayed pricing recovery of private equity, the slow but steady recovery of the Plan’s structured credit portfolio, and the announcement of the COVID-19 vaccines that have kickstarted a strong recovery in small-cap stocks, emerging market stocks, and credit.
Over the last 40 years, we have earned an average annual return of more than 8% on our investments, a period which includes numerous recessions and other economic disruptions — including the global financial crisis, which had an even broader sell-off than the one the world faced this last year.
Our proactive strategy helps SBCERA provide retirement security to our members now and well into the future.