Peruvian Yields Rise Most in Month as U.S. Concern Saps Risk Bid

Peru’s dollar bonds fell, pushing yields up the most in a month, on concern the struggle of U.S. lawmakers to reach a budget compromise may derail the world’s largest economy and erode demand for risk.

The yield on the benchmark 6.55 percent dollar-denominated bond due in March 2037 rose seven basis points, or 0.07 percentage point, to 3.72 percent at 10:39 a.m. in Lima, the biggest increase on a closing basis since Oct. 26, according to data compiled by Bloomberg. The price dropped 1.5 cents to 145 cents per dollar.

The U.S., Peru’s biggest trading partner after China, faces a so-called fiscal cliff of $607 billion in automatic spending cuts and tax increases scheduled to take effect starting Jan. 1 if Congress can’t agree to reduce the deficit.

“The deadline is approaching, and there’s still no deal,” said Siobhan Morden, the head of Latin America fixed- income strategy at Jefferies Group Inc. in New York. “We’re heading for a period of more risk aversion.”

The sol appreciated 0.1 percent to 2.5875 per U.S. dollar, according to Deutsche Bank AG’s local unit.

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