Bloomberg News

Peru Yields Fall to Four-Month Low as ECB Lending Spurs Demand

March 02, 2012

Peruvian dollar bonds rose, pushing down yields to a four-month low, after the European Central Bank’s record loans to the region’s financial institutions spurred demand for emerging-market, higher-yielding assets.

The yield on the nation’s benchmark 6.55 percent dollar- denominated bond due March 2037 fell one basis point, or 0.01 percentage point to 4.68 percent at 1:37 p.m. in Lima. That’s the lowest yield since Nov. 8. The bond’s price rose 0.23 cent to 127.38 cents per dollar.

The ECB said Feb. 29 it will lend 800 financial institutions 529.5 billion euros ($705.7 billion) for three years, the biggest single refinancing operation in its history. U.S. Federal Reserve Chairman Ben S. Bernanke told Congress “exceptionally low” interest rates are likely to be warranted at least through late 2014.

“There’s a lot of liquidity in a context of calm financial markets and low risk aversion, and it’s flowing toward emerging assets, including Peruvian bonds” said Estefany Castillo, an economist at Scotiabank Peru in Lima. “Peru is among the countries in the region with better fundamentals.”

The sol was unchanged at 2.6750 per U.S. dollar, according to Deutsche Bank AG’s local unit.

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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