UPDATE 1-The Central Bank of Peru will offer short term loans, buy dollars from pension funds


(Add a comment on the pension fund, the context)

LIMA, May 6 (Reuters) – The Central Bank of Peru on Wednesday said it will offer short-term loans to private pension fund managers in the country to help ease the pain of complying with a new law that allows citizens to partially withdraw their savings amid the coronavirus epidemic.

Julio Velarde, the bank’s chairman, said the three-month loans would allow fund managers to hold onto their investments, preventing a discount on cheap assets at a time when funds are already reeling from the downturn. spread of the coronavirus.

Velarde said the bank would also buy dollars from the funds if needed for a limited time.

“This will reduce exchange rate volatility… and limit the impact on pension funds. Otherwise, the dollar accounts would be liquidated for fewer soles, ”Velarde said in a speech to a congressional task force posted online.

The Peruvian Congress promulgated a law at the end of April allowing individual withdrawals of up to 25% of their holdings in private pension funds to mitigate the impact of the coronavirus pandemic.

The law put pressure on the four private pension fund companies that operate in Peru. Together, they manage the equivalent of $ 46 billion, according to data at the end of March.

The investment banks BTG Pactual and UBS have nevertheless both reaffirmed their recommendation to “buy” the shares of the holding company Credicorp, which controls AFP Prima, one of the Peruvian pension funds.

AFP Prima investment manager Jose Larrabure said the funds would hand over sovereign bonds to support central bank lending.

“The central bank will give us liquidity to make our payments without having to sell sovereign bonds under pressure,” Larrabure said.

Peru has been particularly affected by the global coronavirus pandemic. The number of new confirmed cases on Tuesday exceeded 50,000, despite being one of the first in the region to implement a shutdown when the coronavirus landed.

Peru ranks behind Brazil for contagions in the region. (Reporting by Marco Aquino; additional reporting by Marcelo Rochabrun and Ana Maria Cervantes, writing by Dave Sherwood; editing by Leslie Adler)

Previous NEA: ECs can apply for short-term loans from banks
Next 5paisa.com launches peer-to-peer lending platform

No Comment

Leave a reply

Your email address will not be published. Required fields are marked *