Bloomberg News

Peru’s 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 17 basis points, or 0.17 percentage point, to 215 at 3:56 p.m. New York 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 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 Peru’s benchmark 7.84 percent sol-denominated bond due August 2020 was little changed at 5.74 percent, according to prices compiled by Bloomberg.

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

The Andean country’s central bank bought $151 million in the spot market today to slow gains in the local currency. The bank paid an average 2.6940 soles per dollar, it said on its website.

--Editor: Glenn J. Kalinoski

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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