German Insurance Supervisor extends limits for investments in High Yield Instruments

BaFin publishes a ruling on investments in High Yield Instruments now being eligible also through the so called 5% escape clause (Öffnungsklausel). The supervisor’s objective is to extend the limit of the existing special 5% quota for this asset class within the restricted assets.

Given sufficient risk bearing capacity investors under supervision may now continue to invest in high yield instruments even if the special high yield quota is already completely utilised. It is however not intended to increase the original 5% high yield quota.

A precondition for using the escape clause requires at a speculative grade rating (such as B-/B3 at least) or an investor’s own appraisal that is equivalent to the rating levels.

Further details are available on request.

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