TOKYO Dec 12 Japan's Government Pension
Investment Fund, the world's largest public pension fund, will
start buying inflation-linked government debt from April and
will join Canada's OMERS in investing in infrastructure projects
abroad, people familiar with the process said on Friday.
The $1.2 trillion fund will buy more than 400 billion yen in
Japanese government bonds whose principal increases with rises
in the nation's consumer prices, the sources told Reuters on
condition of anonymity.
In tying up with OMERS, one of Canada's largest pension
plans, GPIF joins a big investor with experience in
infrastructure and will also be joined by the government-owned
Development Bank of Japan, the sources said.
A spokeswoman for OMERS in Toronto was not immediately
reachable for comment.
GPIF carries great weight in financial markets because of
its enormous size and its role as a leader of other Japanese
public funds, which have total assets of more than $2 trillion.
The fund is under pressure to overhaul its portfolio, which
is heavily weighted towards very low-yielding straight JGBs, as
part of Prime Minister Shinzo Abe's drive to boost returns to
help support Japan's burgeoning elderly population. Abe also
wants to channel the nation's vast pools of financial assets
towards riskier investments and more productive uses.
Earlier this month, GPIF president Takahiro Mitani told
Reuters he had a strong interest in buying inflation-linked JGBs
as an inflation hedge for the fund's portfolio but noted that
the current amount is very low. The government plans to double
its issuance of inflation-linked JGBs to 1.2 trillion yen next
fiscal year as Abe pushes to break Japan free from 15 years of
deflation, government sources said at the time.
GPIF is also considering further investment in alternative
assets, such as private equity, as recently recommended by a
government panel, one source said on Friday.
A government advisory panel has been looking for ways to
have GPIF help revitalise Japan's capital markets, finding more
productive uses for the country's $15 trillion in household
assets, which are largely locked in very low-yielding bank
accounts and Japanese government bonds.
(Reporting by Chikafumi Hodo and Takaya Yamaguchi; Additional
reporting by Euan Rocha; Writing by William Mallard; Editing by