Peru’s dollar bonds fell, pushing yields up the most in a month, on concern the struggle of U.S. lawmakers to reach a budget compromise may derail the world’s largest economy and erode demand for emerging-market assets.
The yield on the benchmark 6.55 percent dollar-denominated bond due in March 2037 rose seven basis points, or 0.07 percentage point, to 3.72 percent at 3:12 p.m. in Lima, the biggest increase on a closing basis since Oct. 26, according to data compiled by Bloomberg. The price dropped 1.5 cents to 145 cents per dollar.
The U.S., Peru’s biggest trading partner after China, faces $607 billion in automatic spending cuts and tax increases scheduled to take effect starting Jan. 1 if Congress can’t agree on a plan to avoid the so-called fiscal cliff.
“The deadline is approaching, and there’s still no deal,” said Siobhan Morden, the head of Latin America fixed- income strategy at Jefferies Group Inc. in New York. “We’re heading for a period of more risk aversion.”
The sol appreciated 0.1 percent to 2.5870 per U.S. dollar, according to Deutsche Bank AG’s local unit. The central bank bought $20 million and said on its website it paid an average 2.5879 soles per dollar.
The yield on the nation’s benchmark 7.84 percent sol- denominated bonds due in August 2020 fell two basis points to 4.17 percent, according to prices compiled by Bloomberg. The price rose 0.12 centimo to 123.79 centimos per sol.
To contact the reporter on this story: John Quigley in Lima at email@example.com
To contact the editor responsible for this story: David Papadopoulos at firstname.lastname@example.org