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Peru Pension Fund Limit Depends on Full Central Bank Board

Peru’s central bank will need to fill the vacant seats on its seven-man board before it can raise the ceiling on how much private pension funds can invest abroad, AFP Prima Chief Investment Officer Jose Antonio Roca said.

Pension funds, which manage a total 100 billion soles ($38.7 billion), are near the 30 percent portfolio limit for investing outside Peru, Roca told reporters in Lima today.

“We need to diversify our portfolios,” said Roca, who manages $10 billion at AFP Prima, Peru’s biggest pension fund. “There aren’t enough local instruments such as infrastructure investments.”

Pension funds have invested 11 percent of assets in infrastructure projects, including 540 million soles this year in Construtora OAS Ltda.’s Via Parque Rimac expressway in Lima, according to the Pension Fund Association. Peru will let funds invest more overseas to ease currency appreciation and help avoid a local asset bubble, central bank President Julio Velarde said Oct. 3.

Central bank spokesman Vidal Silva declined to comment by phone today on whether that change will require all seven directors at the bank. Congress is expected to name three new directors this month, Velarde said Aug. 6.

The sol appreciated 0.2 percent to 2.5780 per U.S. dollar at today’s close, according to Deutsche Bank AG’s local unit, prompting the central bank to buy $150 million on the spot market.

The yield on the nation’s benchmark 7.84 percent sol- denominated bond due August 2020 rose one basis point, or 0.01 percentage point, to 4.26 percent, according to prices compiled by Bloomberg.

Among this year’s investments, the pension funds have bought bonds sold by Volcan Cia. Minera SAA, Camposol Holding Plc (CSOL) and Maestro Peru SA, Roca said.

To contact the reporter on this story: Alex Emery in Lima at aemery1@bloomberg.net.

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

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