Peruvian bonds rose for the third week in a row as investors speculated that the South American country could provide a haven from global market turmoil.
The yield on the nation’s benchmark 7.84 percent sol-denominated bond due August 2020 fell seven basis points, or 0.07 percentage point, to 6.13 percent this week, according to prices compiled by Bloomberg. The bond’s price rose 0.52 centimo during the week to 111.67 centimos per sol.
Global stock markets tumbled yesterday as Europe continued to struggle with a months-long debt crisis that threatens to spread from Greece to Spain and Italy and concern mounted over an economic slowdown in the U.S. Doubts about the safety of investments in the developed world increased demand for assets in countries viewed as having sound fiscal policies, such as Peru, said Hugo Perea, the chief economist at BBVA Banco Continental.
“There is a different trend during this period of global turmoil than what we’ve seen before,” Perea said in a telephone interview from Lima. “We have seen capital inflows from outside the country. Foreign investors are taking more positions in emerging-market bonds in countries like Peru that are fiscally sound.”
Peruvian bonds have also benefitted from signs the government of President Ollanta Humala, who took office July 28, will defend policies that have fueled growth, Perea said.
“The new government has given signals that have been well received by the market,” he said. “It has confirmed that it will maintain economically orthodox policies, which has helped strengthen investor confidence.”
The sol was little changed today at 2.7406 per U.S. dollar, from 2.7405 yesterday. It fell 0.1 percent for the week.