SINGAPORE (Reuters) - Singapore is setting up a debt facility and creating investment benchmarks to attract institutional investors who can provide the billions of dollars needed for the region's infrastructure projects, the central bank chief said on Tuesday.
"The demand for infrastructure financing in Asia is outpacing countries' funding capacity," Ravi Menon, managing director of the Monetary Authority of Singapore, said at the Nomura Investment Forum Asia.
More than 90 percent of infrastructure investment in the region is currently financed by governments, he said.
"This is clearly not sustainable if the demand for infrastructure is to be met," Menon said, adding the challenge for governments was to make infrastructure more attractive to private capital.
In Southeast Asia, countries such as Indonesia, the Philippines, Vietnam and Singapore have launched multi-billion dollar infrastructure projects to build and upgrade airports, roads and power plants.
To facilitate Asian infrastructure financing, Singapore is working with industry partners to securitise a pool of brownfield regional project finance loans from banks into a collateralized loan obligation, Menon said.
This will enable institutional investors, including insurers and pension funds, to invest in debt, he said.
The wealthy city-state is also creating investment benchmarks that will allow investors to compare returns on privately-held infrastructure debt and equity against other asset classes.
Citing data from the Asian Development Bank, Menon said Asia needed around $1.7 trillion annually in infrastructure financing through 2030 to sustain economic growth.
In August 2017, a bond issue by Indonesian independent power producer PT Paiton Energy raised the prospects for project bonds in Asia, the ratings agency Moody's said.
The company had attracted an order book of $9 billion for a $2 billion offering of two-tranche bonds.