LOS ANGELES — California Treasurer John Chiang put out a statement reassuring Californians that he is monitoring the impact of Brexit on state finances.
Chiang stressed that the uncertainty roiling world markets after Britain's vote to depart from the European Union isn't expected to substantially impact investments managed by his office or the state's outstanding debt.
"Today's events will have no impact on the state's fixed-rate bonds," Chiang said in a statement released Friday. "There have been only minimal changes to interest rates on variable-rate bonds."
About two-thirds of the $75 billion Pooled Money Investment Account is invested in low risk and liquid U.S. government securities, he said. The balance is in prime-rated capital market investments. The account includes $22.5 billion in local government agency funds.
In addition, the state's outstanding, general obligation debt portfolio is conservative, with 95% in fixed-rate bonds and just 5% in variable-rate bonds, according to the treasurer.
"Market volatility could be sharp until many questions surrounding Brexit can be resolved over the coming two years," Chiang said. "Californians can be assured, however, that my office is monitoring developments closely and will take appropriate actions to safeguard the state's financial integrity.
"Our $75 billion investment portfolio and another $75 billion in outstanding general obligation debt are in strong positions to weather the uncertainty as Great Britain and the European Union embark on a complex and unprecedented separation."
The California Public Employees' Retirement System also issued a statement Friday.
"We are carefully monitoring the situation," said CalPERS Chief Investment Officer Ted Eliopoulos. "As a long-term investor, we don't overreact to short-term volatility but we will take appropriate steps to best protect our portfolio."
Additionally, Eliopoulos made a series of comments on the matter in a video recording also released today.
The 80-year-old pension fund provides retirement benefits to 1.7 million state, school and public agency members in the state. CalPERS' total fund market value currently stands at approximately $294 billion.
