Bloomberg News

Peru Dollar Borrowing Costs Fall Most in Six Weeks on Europe

December 20, 2011

Dec. 20 (Bloomberg) -- Peru’s benchmark borrowing costs in dollars fell the most in six weeks after an unexpected rise in German business confidence boosted demand for higher yielding, emerging market assets.

The extra yield investors demand to own Peruvian government bonds instead of U.S. Treasuries fell 16 basis points, or 0.16 percentage point, to 216 at 11:37 a.m. Lima time, according to JPMorgan Chase & Co. It was the biggest drop since Nov. 3.

The Munich-based Ifo institute’s business climate index rose to 107.2 from 106.6 in November, after economists surveyed by Bloomberg had forecast a drop to 106. Peru’s benchmark dollar borrowing costs rose to a two-year high of 295 basis points above Treasuries on Oct. 3 on concern the euro area’s debt crisis will push European economies into recession.

“Data out of Germany shows that investor and consumer confidence is withstanding the effects of the as-yet unresolved debt crisis,” said Roberto Flores, head of research at Inteligo SAB, a Lima-based brokerage.

The yield on the nation’s benchmark 7.84 percent sol- denominated bond due August 2020 fell one basis point, or 0.01 percentage point, to 5.73 percent, according to prices compiled by Bloomberg.

The sol rose 0.1 percent to 2.6945 per U.S. dollar.

--Editors: Brendan Walsh, 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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