France’s FRR goes to market for €5.5bn in eleven bond mandates

Fund seeks managers for investment grade and high yield briefs

France’s €33.6bn pensions reserve fund, the Fonds de Réserve pour les Retraites (FRR), which has a core ESG strategy in its manager selection, has gone to market for a series of European investment grade and high yield bond mandates worth a sixth of its total assets at €5.5bn in total.

The mandates are split into two main buckets.

The first bucket valued at €4.5bn is for six investment mandates running briefs to invest actively in euro denominated investment grade bonds and other similar debt instruments.

FRR said its definition of active management means managers taking their own positions relative to the benchmark Bloomberg Barclays Euro-Aggregate: Corporates index to aim for outperformance within a given risk tolerance. FRR authorises a 15 % diversification into sub investment grade paper down to a limit of Bb.

It said the active policy also included managers taking into account the fund’s responsible investment policy of ESG analysis, investment exclusions in prohibited weapons, tobacco and coal, and its policy of corporate engagement with companies held in its investment portfolio.

The six mandates will be awarded for 60 months with potential for renewal for a further year. The fund will only accept tenders from managers already running a minimum of €850m in Euro-denominated investment grade bonds.

The second mandate bucket is for five investment briefs for a total value of €1bn in Euro denominated high yield bonds and similar instruments.

The fund said the benchmark would be similar to the Bloomberg Barclays European High Yield: 3 % Issuer Constraint index, with further details outlined in the mandate, including the potential for further diversification.

To be included managers must already be running more than €250m in Euro-denominated high yield bonds.

Again, the mandates are for 60 months with potential for 1-year renewal.

Tenders must be received in French by 12pm on June 22 to Anne-Marie Jourdan at

In 2019, the FRR returned 9.66%. The annualised performance of the portfolio, since 1 January 2011 is +4.9% net of all expenses. Under pension reforms introduced in 2010, FRR began in 2011 to pay about €2bn per annum into CADES (Caisse d’Amortissement de la Dette Sociale), the state agency charged with funding France’s social security debt. FRR has so far paid €18.1bn to CADES.