Peru Dollar Bond Yields Rise to Three-Month High; Sol Advances

Peru’s dollar-denominated bonds fell, pushing up yields to a three-month high, as U.S. lawmakers struggled to reach a budget compromise, discouraging demand for emerging-market assets.

The yield on the nation’s 7.35 percent dollar-denominated bond due in July 2025 rose three basis points, or 0.03 percentage point, to 3.03 percent at 1:25 p.m. in Lima, according to Bloomberg prices. That is the highest since Sept. 21. The bond’s price fell 0.40 cent to 144.87 cents per dollar.

The U.S., Peru’s biggest trading partner after China, faces $607 billion in automatic spending cuts and tax increases scheduled to take effect starting Jan. 1 if President Barack Obama and Congress can’t agree on a plan to avoid them.

“There’s still a lot of negotiating to be done,” said Roberto Flores, the head of research at Inteligo SAB, a Lima- based brokerage. “This is the big issue, the driver that will determine how markets perform through year-end.”

The sol appreciated 0.1 percent to 2.5615 per U.S. dollar, according to Deutsche Bank AG’s local unit.

House Speaker John Boehner’s budget plan would put “too big a burden on the middle class” and the president would veto it, White House Communications Director Dan Pfeiffer said.

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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