Peru Sol Bonds Gain for Sixth Day on Growth, Inflation Outlook

Peruvian bonds rose for a sixth day as higher-than-forecast growth in May and speculation inflation will slow within the central bank’s target buoyed demand for the fixed-rate securities.

“Positive numbers have been coming out of Peru recently,” said Hedmond Rios, an economist at Celfin Capital in Lima. Peru’s sol-denominated bonds “have proved attractive to foreign investors amid the good local conditions, and especially given the uncertainty in global markets.”

The yield on the nation’s 7.84 percent sol-denominated bond due in August 2020 fell two basis points, or 0.02 percentage point, to 4.53 percent today, according to prices compiled by Bloomberg. It has fallen 83 basis points since May 24. The price rose 0.13 centimo today to 122.01 centimos per sol.

Economic activity rose 6.5 percent in May from the same month a year earlier, after a 4.4 percent expansion in April, the government’s statistics agency said in a July 15 report. Economists predicted growth of 5.3 percent, according to the median estimate of 14 analysts surveyed by Bloomberg.

Rios expects inflation to slow to 2.8 percent at the end of the year, within the central bank’s 1 percent to 3 percent target. The annual inflation rate fell to a nine-month low of 4 percent in June, according to a July 1 government report.

The sol closed little changed at 2.6195 per U.S. dollar, from 2.6205 yesterday, 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 $113 million in the spot market today to slow the sol’s advance, extending its purchases this month to $504 million.

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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