Bloomberg News

Peru Bond Yields Decline to Three-Month Low on Europe Outlook

February 14, 2012

Feb. 14 (Bloomberg) -- Peruvian dollar bonds rose, pushing down yields to a three-month low, as a surge in German investor confidence bolstered the outlook for Europe’s largest economy and boosted demand for higher-yielding, emerging-market assets.

The yield on the Peru’s benchmark 6.55 percent dollar- denominated bond due March 2037 fell two basis points, or 0.02 percentage point, to 4.71 percent at 1:23 p.m. in Lima, the lowest since Nov. 16. The bond’s price rose 0.35 cent to 126.97 cents per dollar.

German investor confidence surged to a 10-month high as global growth picked up and Europe’s debt crisis showed signs of abating. Reduced risk aversion and investors’ hunt for yield spurred demand for Peru’s foreign-currency debt, said Manuel Aldave, head of investments at Banco Internacional del Peru.

“Investors are desperate for carry,” Aldave said, in reference to the practice of borrowing funds from low-interest- rate countries to buy assets in higher-yielding nations.

Peru’s sol fell 0.1 percent to 2.6865 per U.S. dollar, from 2.6850 yesterday.

--Editors: Richard Richtmyer, 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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