Peru Bond Yields Drop to Six-Week Low as U.S. Outlook Buoys Risk

Peru’s sol-denominated bonds rose, pushing yields to a six-week low, as optimism the U.S. will avoid automatic tax increases and spending cuts boosted demand for higher-yielding, emerging market assets.

The yield on the nation’s benchmark 7.84 percent debt due in August 2020 fell one basis points, or 0.01 percentage point, to 4.25 percent, the lowest level on a closing basis since Oct. 5, according to data compiled by Bloomberg. The price climbed 0.04 centimo to 123.31 centimos per sol.

“There seems to be greater consensus on how the authorities can reduce the debt burden,” said Hedmond Rios, an economist at Celfin Capital in Santiago.

Peru’s debt gained as U.S. Federal Reserve Chairman Ben S. Bernanke said in New York that an agreement on reducing government deficits may remove an impediment to economic growth.

The sol depreciated 0.1 percent to 2.60 per U.S. dollar at today’s close, according to Deutsche Bank AG’s local unit. The central bank said on its website it bought $20 million in the spot market and paid an average 2.6002 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