Bloomberg News

Peruvian Yields Fall as Cuts in Borrowing Abroad Buoy Local Debt

July 05, 2012

Peruvian bonds rose, pushing yields down the most in three days, as interest-rate reductions in Europe and China boosted the appeal of the Andean nation’s fixed-rate assets.

The yield on Peru’s benchmark 7.84 percent sol-denominated bond due in August 2020 fell three basis points, or 0.03 percentage point, to 4.96 percent, according to prices compiled by Bloomberg. The price increased 0.22 centimo to 118.93 centimos per sol.

The U.S. Federal Reserve may take further steps before the end of the year to stimulate growth after extending last month its program of selling shorter-term debt and buying longer maturities to reduce borrowing costs, said Felipe Hernandez, analyst at Royal Bank of Scotland Group Plc in Stamford, Connecticut.

“With all that liquidity, people will start looking for assets to invest in,” Hernandez said in a phone interview. “There’s room for foreign investors to add to their holdings of local currency government bonds. Yields in Peru are still relatively attractive compared with other Latin American countries.”

The sol fell 0.2 percent to 2.6495 per dollar at today’s close, according to Deutsche Bank AG’s local unit. The central bank didn’t buy or sell dollars in the spot market today.

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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