Ex-Rebel Humala Sparks Rise in Default Swaps Before Election
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The cost of insuring Peru’s debt against default is jumping to a five-year high relative to neighboring Colombia on concern former renegade army colonel Ollanta Humala will win the presidential vote and expand government control of the economy.
Peruvian five-year credit-default swaps rose 35 basis points since polls released March 20 showed Humala gaining popularity, to 154 yesterday, or 49 more than similar contracts on Colombia, according to CMA. The gap was 1 basis point on March 16, the day Standard & Poor’s raised Colombia’s credit rating to the same BBB- level as Peru, citing President Juan Manuel Santos’s policies that cut crime and lured investment.