Bloomberg News

Peru’s Borrowing Costs Fall as Fed Sees U.S. Economy Improving

March 13, 2012

Peru’s benchmark borrowing costs in dollars fell to a seven-month low after Federal Reserve policy makers raised their assessment of the U.S. economy, spurring demand for higher-yielding, emerging-market assets.

The extra yield investors demand to own Peruvian government bonds instead of U.S. Treasuries dropped three basis points, or 0.03 percentage point, to 171 at 3:57 p.m. in Lima, according to JPMorgan Chase & Co. That’s the narrowest gap since Aug. 3.

Labor market conditions have improved while strains in global financial markets have eased, the policy-setting Federal Open Market Committee said in a statement at the conclusion of a meeting today in Washington.

“There’s a more supportive environment for risk-taking,” said Roberto Melzi, a strategist at Barclays Plc in New York.

Peru’s sol was little changed at 2.67 per U.S. dollar at today’s close, compared with 2.6695 yesterday, according to Deutsche Bank AG’s local unit.

The Andean country’s central bank bought $141 million in the spot currency market today to stem gains in the sol. It paid an average 2.6698 soles per U.S. dollar, the bank said on its website.

Corporate bond and share issuance rose 19 percent to $295 million in the first two months of the year from the same period of 2011, the country’s securities regulator said.

The yield on the nation’s benchmark 7.84 percent sol- denominated bond due August 2020 fell one basis point to 5.39 percent, according to prices compiled by Bloomberg. The security’s price rose 0.03 centimo to 116.34 centimos per sol.

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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