NZ Superfund drawn into Portuguese 'bad bank' fight

The New Zealand Superannuation Fund has so far spent about $150,000 in legal fees as part of its case to overturn a decision by the Bank of Portugal to move the fund's US$150 million investment into a "bad bank", thereby voiding its insurance on the investment.

According to online news service BusinessDesk, New Zealand's sovereign fund had written off the value of its investment after the Portuguese central bank decided to place the Goldman Sachs-organised loan to Banco Espírito Santo into the "bad bank" part of BES rather than the new state-supported "good bank" it set up following a reorganisation.

The Super Fund is among noteholders contesting the decision, which reversed an earlier ruling by the central bank.

Super Fund CEO Adrian Orr said the Fund had similar investment strategies worth more than NZ$1 billion over the past five years, regularly using credit default swap insurance, and they all had worked "exactly as anticipated".