Bloomberg: If the U.S. loses its AAA credit rating, Hong Kong will sell U.S. Treasury bonds

ChainCatcher news, according to Bloomberg, Hong Kong's Mandatory Provident Fund (MPF) managers have drafted a preliminary plan to reduce their holdings of U.S. Treasuries within three months if the U.S. loses its last AAA credit rating.

According to local regulations, funds operating under Hong Kong's HK$1.3 trillion (US$166 billion) mandatory provident fund scheme can only invest more than 10% of their assets in U.S. Treasuries if they are granted a AAA rating or equivalent by a recognized rating agency in the U.S.

After Moody's took action to downgrade last month, only Japan's Rating & Investment Information Inc. remains as the sole recognized agency maintaining the highest rating for the U.S. Although R&I stated that it is not considering a downgrade of the U.S. rating, the Mandatory Provident Fund Schemes Authority urged pension fund managers last month to develop "contingency plans" to respond to potential rating downgrades.