Bloomberg News

Peru Bonds Rally as Europe, U.S. Jobs Data Spur Stimulus Bets

May 02, 2012

Peruvian bonds gained, pushing yields down the most this year, as bets central banks in the U.S. and Europe will keep borrowing costs low to boost employment spurred demand for the debt.

The yield on the nation’s 7.84 percent sol-denominated bond due August 2020 dropped six basis points, or 0.06 percentage point, to 5.09 percent, according to prices compiled by Bloomberg. That’s the lowest on a closing basis since at least February 2006. The reduction in yield was the biggest since Nov. 30. The security’s price increased 0.40 centimo to 118.25 centimos per sol.

The mood in “fixed income in emerging markets is a lot more bullish,” said Dirk Willer head of Latin American local markets strategy at Citigroup Inc. in New York. “The odds have risen” for a rate cut by the European Central Bank and for the Federal Reserve to take additional steps to lower borrowing costs, he said.

The sol was little changed at 2.6360 per U.S. dollar, according to Deutsche Bank AG’s local unit.

Euro-region unemployment rose to a 15-year high and manufacturing contracted for a ninth month, adding to signs the economic slump is deepening. U.S. companies added 119,000 workers in April, the fewest in seven months, according to figures from Roseland, New Jersey-based ADP Employer Services. The median forecast of economists surveyed by Bloomberg News called for a 170,000 advance.

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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