IRELAND - Irish pension funds are in "detailed talks" with the government about infrastructure investments, which could support the state's battered balance sheet, the department of finance has confirmed.
He said: "There are several ways in which these investments could take place and they are all under discussion at the moment."
He added further meetings were scheduled, but he declined to comment further on the status of the talks.
Irish Association of Investment Managers chief executive Frank O'Dwyer said the government started the talks to sense the investors' community appetite on 'infrastructure bonds', but that the financing of these infrastructure projects would take place also through the issuance of equities and loans.
In terms of the government's target of money to be raised, O'Dwyer said the fundraising would be aimed to reach €5 - 6bn (US$9bn) a year of spending.
Currently, talks are focusing on the risk-returns, maturity and liquidity aspects of these bonds, which specifically concern pension funds. IAIM chief executive said the bonds would be long-dated, with a maturity of 15-20 years.
He said: "The initiative is interesting for pension funds from an ESG perspective. There are a number of projects in water treatment and renewable energy which would have an additional traction for trustees to allocate funds to."
The next steps of the talks would be centred on the design of the bonds, with the definition of its structure and of its coupon. According to O'Dwyer, the Irish government is willing to invest time on this project because of the meaningful response he got from the pension funds and investment community.
However, Irish Association of Pension Funds director of policy Jerry Moriarty said pension funds should consider this kind of investments only if they offer an attractive rate of return and an appropriate risk profile.
He said: "There has been a suggestion that pension funds should consider the underlying national interest of this initiative. But this is not a criteria trustee should take into account under trust law."
He added pension funds would need to decide whether such investment make solely on the base of their own liability profile, asset profile and their investment policy.
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