Peru Dollar Borrowing Costs Rise on Europe Debt Crisis Concern

Peru’s benchmark borrowing costs in dollars rose for a second straight day as European sovereign- debt concern curbed demand for higher-yielding, emerging-market assets.

The extra yield investors demand to own Peruvian government bonds instead of U.S. Treasuries increased four basis points, or 0.04 percentage point, to 117 basis points at 2:52 p.m. in Lima, according to JPMorgan Chase & Co.

European Central Bank Governing Council member Luc Coene said yesterday that rising bond yields may force Spain to seek assistance and submit to ECB conditions for aid.

Coene’s comments “brought people’s attention back to Europe” and may have spurred “short-term profit-taking after QE,” said Kenneth Lam, a strategist at Citigroup Inc. in New York, referring to the Federal Reserve’s third round of asset purchases known as quantitative easing announced Sept. 13.

The sol was little changed at 2.6020 per dollar, according to Deutsche Bank AG’s local unit. Peru’s central bank said on its website that it bought $40 million in the spot currency market today and paid an average 2.6026 soles per dollar.

To contact the reporter on this story: John Quigley in Lima at jquigley8@bloomberg.net

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

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