INDIA - Canadian, European pension funds may invest in road projects in India attracted by the higher yields than the U.S. after the nation lifted the cap on foreign investment in bonds to lure capital for infrastructure projects.
"Long-term funds require a good parking lot and this will be a good parking lot," Road Transport and Highways Minister Kamal Nath said in an interview with Bloomberg UTV. "I have got promises" from Canada and Europe, he said, declining to identify the funds.
Prime Minister Manmohan Singh last month allowed overseas investors to buy $5bn more of obligations sold by infrastructure companies to improve quality of the nation's ports, power stations and roads, used to transport 65% of freight in Asia's second-fastest growing major economy. India, which has the highest density of highways in the world, ranks below war-ravaged Ivory Coast for the quality of infrastructure.
International investors more than doubled holdings of India's government and corporate debt this year to a record $17.8bn on September 27, data from the Securities & Exchange Board of India show. Foreign investors can buy as much as $20bn of corporate debentures after the latest rule change.
Five-year sovereign notes yield about 660 basis points more than similar-maturity Treasuries, the most in at least nine years.
The delay in building roads and the inadequacy of the nation's utilities and transport network shaves 2 percentage points from growth, the Finance Ministry estimates. The economy has expanded an average 8.5% in the last five years.
"Consultants are taking a long time," Nath said. "The coordination between National Highway Authority of India and consultants has been very poor and that's causing delays."
India needs to double spending on building infrastructure projects to $1trn in the five years to 2017, according the country's Planning Commission. The South Asian nation is ranked 89 out of 133 nations for its infrastructure, according to the World Economic Forum's Global Competitiveness Index.
Nath has set a target of building 20 kilometers of highways a day through 2015 as the government tries to ease congestion and accelerate economic growth. The government is building 13 kilometers a day as of now, he said.
India will need to borrow as much as 200 billion rupees ($4.5 billion) annually from domestic and global markets for the next 15 years to fund the road building projects, the National Highway Authority said last month.
The secretary of state for work and pensions has told MPs clawback and avoidance measures could be imposed for the people responsible for driving Carillion over the cliff.
Occupational pension provision has continued to grow in value, but there remains large variance in incomes across the pensioner age group, according to latest government data.
Defined benefit (DB) schemes could have an aggregate surplus by 2021 under Pension Protection Fund (PPF) projections, its strategic plan for 2018 to 2021 reveals.
Investment consultants are failing to recommend products that outperform net of fees, the Competition and Markets Authority (CMA) has said as its investigation into the market continues.