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Bermuda’s foreign investment assets continue growth

The Bermuda Monetary Authority has released The Coordinated Portfolio Investment Survey, which collects information about the cross-border holdings of portfolio investment securities (File photograph)

Bermuda’s holdings of total assets increased by 16.9 per cent (or $239.4 billion) by the end of 2021 compared to the previous year, reaching $1.66 trillion, according to new figures from the Bermuda Monetary Authority.

At the same time, Bermuda’s foreign portfolio of investment assets reached $955 billion, an increase of 12.6 per cent (or $106.7 billion) when compared to the value of holdings as of 31 December 2020.

The figures are contained in The Coordinated Portfolio Investment Survey, a voluntary data collection exercise conducted by the BMA annually under the auspices of the International Monetary Fund.

The CPIS collects information about the cross-border holdings of portfolio investment securities in different economies.

Portfolio investment is defined as cross-border transactions and positions involving debt or equity securities other than those included in direct investment or reserve assets.

The IMF has been conducting the CPIS since 1997, and over 80 countries currently participate in the survey. Bermuda has participated in this exercise since 2001.

Bermuda’s numbers include data from both the domestic and international sectors. The size and relevance of the latter category make Bermuda an International Financial Centre.

The figures are contained in the CPIS report’s executive summary, as released by the BMA.

In addition, the report shows Bermuda’s foreign portfolio holdings comprised approximately 57.7 per cent of total Bermuda financial services assets, down from 59.8 per cent in 2020.

The BMA said: “The foreign portfolio holdings for Bermuda entities consist mainly of debt securities. As of 31 December 2020, Bermuda’s holding of foreign debt securities was US$763.9 billion, representing 80 per cent of Bermuda’s foreign portfolio holdings.

“Debt securities were predominantly made up of long-term debt securities, which accounted for 78.9 per cent (US$603.1 billion) of total debt securities.

“Short-term debt securities amounted to US$160.8 billion, accounting for the remaining 21.1 per cent of total debt securities.

“Foreign equity holdings were US$191.4 billion, representing 20.1 per cent of Bermuda’s foreign portfolio holdings.”

The report outlines how Bermuda’s holders of foreign securities can be divided into four subsectors: insurance, investment funds, banking and the Bermuda government.

The BMA report notes that, as can be expected, the insurance subsector has always dominated Bermuda’s foreign portfolio holdings.

As of 31 December 2020, the insurance subsector had an ownership share of 79.5 per cent (or US$759.2 billion).

The report said: “Insurance has been the largest subsector since 2001 when the survey was first conducted in Bermuda. This is consistent with the size and relevance of the insurance industry in Bermuda, which is predominantly an insurance-based IFC.

“Investment funds were the second-largest subsector, accounting for 19.5 per cent (US$186.0 billion), followed by banks, which accounted for 0.7 per cent (US$7.1 billion).

“The Bermuda government’s foreign portfolio holdings were US$2.98 billion, representing 0.3 per cent of Bermuda’s total foreign portfolio holdings as of 31 December 2021.”

The value of Bermuda’s derived liabilities was $585.7 billion, an increase of 3.1 per cent (or $17.4 billion) over 2020. Bermuda’s derived liabilities consisted mainly of equity securities, held predominantly by residents of the US (50.1 per cent) and Hong Kong (19.5 per cent).

Global cross-border holdings of securities have shown a growing trend since the 2007/2008 global financial crisis, reaching a high of $80 trillion as of 31 December 2021, an increase of 5.5 per cent or $4.2 trillion) over 2020.

The Coordinated Portfolio Investment Survey

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Published December 28, 2022 at 7:22 am (Updated December 28, 2022 at 12:37 pm)

Bermuda’s foreign investment assets continue growth

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