Political Risk Latin America Blog @PolRiskLatam

Peru sells long-dated bonds in $2.5bn deal

Posted in News and Articles, Political Risk by politicalrisklatam on November 11, 2010

by Naomi Mapstone for Financial Times, November 10th, 2010.

Peru’s government has sold it longest maturity bonds yet in a $2.5bn deal that took advantage of high liquidity, low yields and investor confidence in the Andean nation’s fast-paced economy. The sale of $1bn in 40-year bonds and $1.5bn in a reopening of existing 2020 bonds comes just weeks after Mexico made history with the first century bond from a Latin American sovereign.

“As the dollar depreciates and you see rising prices for base metals, the Latin American country with the most exposure to that phenomenon is Peru,” Enrique Alvarez, head of research for Latin American financial markets at New York-based IDEA global, told the FT. “It has a very marked and definite and positive dynamic in that sense that investors are keenly aware of.”

The 40-year bonds were priced at 96.164 with a yield of 5.875%. The yield on Mexico’s century bond was 6.1 per cent on the day of issue. Mr Alvarez said the issuance may have achieved an even better result a week ago, as the Peruvians faced headwinds in the wake of the Fed’s latest round of quantitative easing and renewed concerns over European sovereign-debt woes.“In launching this 40-year issue it’s doing something exceptional. It’s not as long as Mexico’s century bond but it’s still a very long-duration credit for Peru – it marks a new long duration point in credit for Peru,” Mr Alvarez said. (continue reading… )




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