Your APERS Pension — What You Should Know About Non-Tradable Sovereign Debt

What Arkansas state employees need to know about APERS pension investments in non-tradable foreign sovereign bonds.

What’s happening with YOUR pension

In May 2025, the Arkansas Public Employees Retirement System (APERS) Investment Subcommittee approved a resolution authorizing a $25–50 million purchase of non-marketable foreign sovereign debt — bonds issued by a foreign government that cannot be sold on any secondary market. Around the same period, a late-2024 internal memo from Senior Investment Officer Steve Pulley in the State Treasurer’s office recommended holding off on new purchases of these bonds because major rating agencies had downgraded the issuing country’s credit.

That combination of a large, concentrated authorization and a prior caution flag raises straightforward questions about risk, return, and process for every APERS member.

New records obtained in February 2026 — including an 8,648-page APERS FOIA production — reveal exactly how these bonds reached the APERS board. Jason Brady, the Auditor of State’s appointee, told fellow board members that “it had come to his attention” that these bonds were available and cited the Treasury’s $55 million in holdings as justification. The board subsequently approved $25–50 million.

Despite that authorization, APERS purchased zero bonds for at least two months. On July 30, 2025, Executive Director Amy Fecher confirmed: “Still zero for APERS.” The next day, CIO Carlos Borromeo emailed Stephens Inc. asking them to forward his contact information to a bond issuer representative — meaning staff were still establishing the basic operational pathway for purchasing well after the board had voted. A bond statement received in November 2025 confirms that a purchase eventually occurred, though the exact amount has not been disclosed.

Additionally, when Arkansas Times journalist Jennifer Lenow sent APERS a request for comment about these sovereign bond investments, Executive Director Amy Fecher’s first action was not to consult APERS’s own communications staff — it was to forward the inquiry to Jason Brady at the Auditor’s office with “FYI.” The pension system’s executive director routed a press question about an APERS investment decision to the office that had arranged the investment in the first place.

These are direct loans to a foreign government that cannot be sold before maturity. Unlike most fixed-income investments, these bonds have no secondary market — once APERS buys them, your pension fund is locked in until the bonds mature.

At the authorized level of $25–50 million, these bonds would represent approximately 0.2–0.4% of APERS’s $11.58 billion portfolio. The question is not whether the allocation is large, but whether the decision followed the fiduciary process Arkansas law requires.

Why it matters

Arkansas law requires state retirement systems to invest and manage assets solely in the interest of members and beneficiaries, based only on “pecuniary factors” — those expected to materially affect risk or return. APERS policy mirrors this duty and incorporates the prudent-investor rule, emphasizing care, skill, diversification, liquidity, and documented due diligence.

The question for APERS is not political: it is whether a sizable, relatively illiquid sovereign bond position is the best available option on risk-return and liquidity, compared with other fixed-income choices that meet the same credit and duration needs.

Here’s what the record shows:

  • The authorization was fast-tracked. In May 2025, the APERS Investment Subcommittee unanimously advanced a $25–50 million sovereign bond resolution, with the authorization later referenced in the September 10, 2025 Board packet.
  • A state official with no investment authority arranged the pitch meetings. On April 11, 2025, State Auditor Dennis Milligan, through his office, scheduled four meetings in 18 minutes — arranging back-to-back sessions for the bond issuer’s sales executives with the heads of APERS, ATRS, and the Treasury, all in the Auditor’s Capitol office (Room 230). The Auditor has no investment authority over any of these funds. (See evidence finding 3e) A thank-you email to APERS staff praised their “kind hospitality” and pitched follow-up meetings, while a separate email to the APERS director used the $20 million Treasury purchase as sales leverage. Within weeks, the Treasury bought $20 million more and both pension funds approved large sovereign bond allocations.
  • The Treasurer’s own staff recommended against it. A late-2024 internal memo from Pulley advised holding off on new purchases of these bonds because major rating agencies had downgraded the issuing country’s credit, signaling higher risk.
  • Non-financial motivations were stated on the record. At the Investment Subcommittee meeting, Deputy State Auditor Jason Brady referenced ties to former Governor Mike Huckabee (then U.S. Ambassador to Israel) and called Israel “the United States’ most trusted and dependable ally in a volatile region.” These are not pecuniary factors.
  • APERS chose no external oversight. CIO Carlos Borromeo stated: “APERS intent is to purchase the bonds directly. Staff opinion is that there is not a need to incur management fees.” This means APERS has no independent investment manager reviewing its sovereign bond position — unlike ATRS, which hired Reams Asset Management. The absence of external oversight makes the lack of independent credit analysis even more concerning.
  • APERS routed press inquiries to the Auditor’s office. When a journalist asked APERS for comment on the sovereign bond investments, Executive Director Amy Fecher forwarded the inquiry to Jason Brady at the Auditor’s office — not to APERS’s own communications staff. The pension system’s response to public accountability questions was coordinated through the same office that had arranged the investment.
  • The Stephens Inc. connection. When APERS staff finally moved to establish contact with the bond issuer in July 2025, the CIO routed the request through Seth Middleton at Stephens Inc. — APERS’s investment consultant. It remains unclear whether Stephens provided any independent assessment of the investment.
  • Press analysis raises questions. Reporting has noted that these bonds often offer lower yields and less liquidity than many higher-rated alternatives. From the public record, the Arkansas Times explicitly asked: “So why Israeli bonds?” — underscoring the need for a clear financial rationale.

APERS leadership has stated that the sovereign bond investment “follows all applicable state statutes and will result in a good outcome for the members and retirees of APERS.” If that’s true, a transparent, side-by-side financial analysis is the surest way to confirm it — and members have every right to see one.

For the full timeline, source quotes, and legal analysis, see our evidence page.

APERS by the numbers

$11.58B Total fund (Q1 FY2025)
-0.79% Q1 2025 return (78th percentile)
~$2.6B Unfunded liability

As of March 31, 2025, the APERS total fund stands at $11.58 billion, with a Q1 2025 return of -0.79% (78th percentile among public fund peers) and a fiscal year-to-date return of 3.02%. The system serves 43,571 active members and 39,546 retirees as of March 2025, with an average annual salary of $48,794. The unfunded actuarial accrued liability stands at approximately $2.6 billion. Contributions cover 66% of benefit payouts, reinforcing the importance of disciplined investment management.

The fund was underweight in fixed income (18.1% actual vs. 21% target) — the asset class where these bonds would sit — yet neither the CIO nor Callan analyzed how they fit the allocation.

The publicly-posted board packets for the May 15 subcommittee and June 11 full board meetings reveal the contrast most clearly. At the same meetings where the board reviewed 37 pages of Callan quarterly analysis covering every asset class in the portfolio, and where three institutional firms presented detailed private credit briefings, the sovereign bond authorization received zero pages of written analysis. The CIO provided no assessment. Callan — APERS’s own investment consultant — was never asked to review the proposed investment.

These are solid numbers. But even in a well-funded system, bypassing standard investment processes for a novel, illiquid asset class sets a precedent that could affect long-term outcomes. The question is not whether APERS can absorb a $25–50 million sovereign bond position, but whether the decision was made through the same rigorous process applied to every other investment.

Updated with Q1 FY2025 data from APERS Quarterly Board Meeting packet, June 11, 2025, publicly posted at apers.org.

What you can do

1. Contact your legislators about the Pension Investment Transparency Act

The 2027 Arkansas legislative session is the place to fix the procedural gap APERS’s authorization exposed. The Pension Investment Transparency Act would require independent credit analysis, consultant independence, and documented financial rationale before pension boards commit members’ retirement funds to non-tradable sovereign debt — closing the gap our FOIA documents revealed.

Find your legislators at arkleg.state.ar.us or text RESIST to 50409 to reach them through Resistbot.

Letter template — your state legislators

Subject line: Public employees support the Pension Investment Transparency Act for the 2027 session

Dear [Representative/Senator],

As an Arkansas public employee and APERS member, I’m writing to ask you to support the Pension Investment Transparency Act in the 2027 legislative session. APERS members earn our retirement through years of state service, and we need the investment process behind that retirement to meet a documented fiduciary standard.

In May–June 2025, the APERS Investment Subcommittee and full board approved a $25–50 million authorization for non-tradable sovereign bonds. More than 1,200 public records obtained through FOIA show no independent credit analysis was produced before that vote. The board reviewed 37 pages of consultant analysis covering every other asset class at the same meeting, and three institutional firms presented detailed private credit briefings. The non-tradable sovereign bond authorization received zero pages of written analysis. Arkansas’s pecuniary-only standard under Act 498 of 2023 already governs these decisions — but the procedural specificity behind that standard (independent credit analysis, consultant independence, documented rationale) is what was missing.

The Pension Investment Transparency Act closes that procedural gap. It does not pressure pension boards to buy or sell any specific investment. It establishes the same documented due diligence standard for non-tradable sovereign debt that already applies to other investment classes.

Sound fiduciary process is non-partisan. It protects every Arkansas public employee whose retirement depends on these funds.

Sincerely, [Your name, role / agency, and city]

2. Attend the next APERS Board meeting

Sitting in on board meetings is one of the most useful things an APERS member can do. You see the documented process firsthand — the consultant analyses presented, the questions asked, the way the record gets made — and that observation is exactly the kind of detail that strengthens the legislative case for PITA.

  • Location: APERS Office, 124 W. Capitol Ave., Little Rock
  • Contact: Executive Director’s office at APERS@arkansas.gov to confirm public-comment logistics
  • Written comment: Email APERS@arkansas.gov with a subject line referencing the board meeting date
  • Upcoming 2026 dates: Check apers.org for the current schedule

60-second public comment script: “Good morning, my name is [Name], and I’m an Arkansas public employee and APERS member. I’m here to share that I support the Pension Investment Transparency Act being prepared for the 2027 legislative session. PITA would require independent credit analysis, consultant independence, and documented financial rationale before pension boards commit members’ funds to non-tradable sovereign debt — the same documented standard already applied to APERS’s other asset classes through Callan and similar consultant work. As a member, I appreciate the rigor of that existing process. Codifying it for sovereign debt acquisitions through PITA would simply make our existing practice the floor, not the ceiling. Thank you for your service to Arkansas public employees.”

3. Share with your coworkers

Talk to other state employees about what’s happening with your pension. Share this page directly — the more members who speak up, the harder it is to ignore.