Bloomberg News

Peru Regulator to Propose Funds Buy Infrastructure Bonds

January 04, 2012

(Adds bond prices in eighth paragraph.)

Dec. 22 (Bloomberg) -- Peru’s chief financial regulator is working on plans to allow the country’s pension funds to buy infrastructure bonds, broadening the investment opportunities available to the $31 billion industry.

The regulator aims to draw up legislation next year that would enable the funds to buy securities linked to infrastructure projects, the Superintendent of Banks, Insurance and Private Pension Funds, Daniel Schydlowsky, said in a Dec. 20 interview in Lima.

Peru’s four private pension funds are seeking new instruments in which to invest assets that have grown 73 percent in the past three years. Congress on July 13 raised the ceiling on the funds’ investments abroad to 50 percent from 30 percent. The regulator wants to spur the sale of securities tied to road, port and telecommunications projects and make the cap on overseas investment “irrelevant,” Schydlowsky said.

“Foreign markets haven’t done very well,” he said. Under the new regulations, the funds would be able to “give us a good pension, but also some decent roads without potholes.”

Peru will invest $20.5 billion in infrastructure over the next five years, including $11 billion to build 7,000 kilometers of roads, Transport Minister Carlos Paredes said Nov. 22.

The country’s pension funds increased their investments abroad to 28 percent of their assets as of Nov. 30, from 10 percent in November 2008, according to the regulator’s website.

The value of the funds’ assets fell to 82.4 billion soles ($31 billion) last month from 84.4 billion soles a year earlier as equities slumped on concern Europe’s debt crisis will sap global growth. The funds had 14 percent of their assets invested in local and foreign stocks last month. The Lima General Index is down 18 percent this year.

The yield on the Peru’s benchmark 7.84 percent sol- denominated bond due August 2020 was little changed at 5.74 percent at 4:03 Lima time, according to prices compiled by Bloomberg.

The sol was little changed at 2.6945 per U.S. dollar, from 2.6940 yesterday, according to Deutsche Bank AG’s local unit.

--Editors: Philip Sanders, Robert Jameson

To contact the reporter on this story: John Quigley in Lima at jquigley8@bloomberg.net.

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net/


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