India’s $182 billion pension fund resumes buying private debt

“Whenever there is a potential for higher returns coupled with safety” in the highest-rated corporate bonds the fund is investing, Prabhakar Banasure, a central board trustee at the Employees’ Provident Fund Organization, said in an interview. A 20% jump in daily inflows into the fund since March this year has driven the decision, he said.

The return of the asset manager to the rupee bond market after a gap of three years, shows that investors like the EPFO are growing more comfortable with the nation’s credit market and are leaving behind concerns from a four-year-old crisis triggered by a domestic shadow lender’s default.

The fund has invested in debt issued by HDFC Bank Ltd., Bloomberg News reported last week.

The New Delhi-based EPFO can invest up to a fifth of its annual incremental deposits in corporate bonds, according to Banasure.

Rising investments by large funds may help ease yields. The yield on the three-year AAA rated corporate bond touched a more than three-year high in November.

“We expect a strong pipeline of issuances from the top-rated private companies as EPFO has restarted investments,” said Ajay Manglunia, managing director at JM Financial Ltd. “It will push down yields, benefiting borrowers with larger demand.” 

This story has been published from a wire agency feed without modifications to the text.