Bloomberg News

Peru Bonds Fall as Europe Crisis Fuels Global Slowdown Concern

September 29, 2011

Sept. 29 (Bloomberg) -- Peruvian bonds fell, pushing up yields the most in a week, as concern the euro-area’s sovereign- debt crisis will derail the global economy cut demand for higher-yielding, emerging-market assets.

The yield on the nation’s benchmark 7.84 percent sol- denominated bond due August 2020 rose five basis points, or 0.05 percentage point, to 5.90 percent, according to prices compiled by Bloomberg. The bond’s price fell 0.4 centimo to 113.21 centimos per sol.

The euro-area economy will fall into recession during the next 12 months, according to about three-quarters of respondents in a Bloomberg survey. More than a third of participants say Europe’s debt troubles will choke the world economy. Copper, Peru’s biggest export, declined amid concern slower growth will curb demand for industrial metals.

“There isn’t any inflow into Peru’s bonds or currency even though they’re at attractive levels,” said Gonzalo Navarro, the head trader at Banco Santander in Lima. “The flows are still going in the other direction. Investors wanting to get out of emerging market assets are using the correction in stocks and currency to do so at interesting prices.”

The sol strengthened less than 0.1 percent to 2.7705 per U.S. dollar, from 2.7715 yesterday.

The central bank didn’t buy or sell dollars in the spot market today, it said on its website.

The extra yield investors demand to own Peruvian government bonds instead of U.S. Treasuries fell nine basis points to 261, according to JPMorgan Chase & Co.

--Editor: Glenn J. Kalinoski

To contact the reporter on this story: John Quigley in Lima at jquigley8@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net


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