US law firm Dechert LLP released a note today on news that the Chilean Pensions Regulator, Comision Clasificadora de Riesgo (CCR), has decided to disapprove Irish-domiciled UCITS for
US law firm Dechert LLP released a note today on news that the Chilean Pensions Regulator, Comision Clasificadora de Riesgo (CCR), has decided to disapprove Irish-domiciled UCITS for general investment. Dechert wrote that having actively engaged with colleagues and Counsel in Chile to determine the ramifications of this decision, the Chilean Counsel told them that rather constituting a “complete prohibition on investment” the disapproval would result in Irish UCITS being qualified as restricted investments. The CCR took the decision on the basis that Irish funds had failed to comply with the provisions of Article 15 of Decision No.32 of the CCR which states that a country’s rating in which the fund, manager or holding company are registered should be at least Category A.
Ireland’s credit rating downgrades have been well documented. But the IFIA have called for separation between the country’s sovereign debt issues and its international funds industry. Something the CCR agreed to go along with, choosing in October 2010 to put Irish funds on a watch list rather than outright disprove them. That now appears to no longer be the case. The downgrade of Irish debt to Junk Status by Moody’s in July 2011 is thought to have been the final straw. Dechert’s Financial Services Group said it was exploring alternative options for its clients affected by this news. One such option might be to replicate or merge Irish portfolios into existing umbrellas or sub-funds domiciled in the UK, Luxembourg or the US. Either way, it’s an unwelcome development for IFIA.