Bloomberg News

Peruvian Sol Bonds Gain as Economy Expands More Than Forecast

July 16, 2012

Peruvian bonds rose, pushing yields lower for a fifth day, after a report showing the economy expanded more than forecast in May buoyed demand for the local securities.

The yield on the nation’s 7.84 percent sol-denominated bond due in August 2020 fell nine basis points, or 0.09 percentage point, to 4.55 percent today, according to prices compiled by Bloomberg. The price rose 0.67 centimo to 121.88 centimos per sol.

“Growth surprised on the upside,” said Hugo Perea, chief economist at BBVA Banco Continental in Lima. “We continue to see foreign investors buying the local bonds, probably based on the view that the global crisis is having a relatively low impact on the Peruvian economy.”

Economic activity rose 6.5 percent from the same month a year earlier, after a 4.4 percent expansion in April, the government’s statistics agency said in an e-mailed report yesterday. Economists predicted growth of 5.3 percent, according to the median estimate of 14 analysts surveyed by Bloomberg.

The sol advanced 0.1 percent to 2.6205 per U.S. dollar at today’s close, according to Deutsche Bank AG’s local unit. Data from Peru’s financial regulator show that’s the strongest level since 1997.

The central bank bought $31 million in the spot market today to slow the sol’s advance, extending its purchases this month to $391 million.

Demand for the currency stems from foreign investors’ purchase of local bonds and as companies buy soles to pay worker bonuses this month, said Perea.

To contact the reporter on this story: Andrea Jaramillo in Bogota at ajaramillo1@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net


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