Bloomberg News

Peru Dollar Borrowing Costs Rise to Two-Year High on Europe Debt

October 03, 2011

Oct. 3 (Bloomberg) -- Peru’s benchmark borrowing costs in dollars rose to the highest level in two years as Germany damped speculation of a breakthrough in talks to contain Europe’s debt crisis, curbing demand for emerging-market assets.

The extra yield investors demand to own Peruvian government bonds instead of U.S. Treasuries rose 17 basis points, or 0.17 percentage point, to 296 at 4:36 p.m. New York time, according to JPMorgan Chase & Co. That’s the widest differential since July 2009.

German Finance Minister Wolfgang Schaeuble said he opposed moves to further boost the rescue fund designed to shore up liquidity in the euro area. Greece passed measures to cut its budget deficit that missed previous goals set as part of bailout conditions. Emerging-market stocks fell after completing their worst quarterly drop since 2008.

“Higher risk aversion is being priced in” to Peru’s financial assets, said Roberto Melzi, a Latin America strategist at Barclays Capital Inc. in New York.

The yield on the nation’s benchmark 7.84 percent sol- denominated bond due August 2020 rose two basis points to 5.93 percent, according to prices compiled by Bloomberg.

The sol weakened 0.1 percent to 2.7745 per U.S. dollar, from 2.7725 on Sept. 30.

The central bank sold $38 million in the currency market today to slow declines in the sol.

--Editors: Brendan Walsh, David Papadopoulos

To contact the reporter on this story: John Quigley in Lima at

To contact the editor responsible for this story: David Papadopoulos at

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