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Peru Yields Rise Most in Month on U.S. Deficit, Local Issuance

Nov. 21 (Bloomberg) -- Peruvian bonds fell, pushing up yields the most in a month, as U.S. lawmakers failed to agree on budget cuts and investors speculated the Andean nation will offer bonds in the domestic market this week.

The yield on the nation’s benchmark 7.84 percent sol-denominated bond due August 2020 rose five basis points, or 0.05 percentage point, to 5.71 percent at 12:45 p.m. Lima time, according to prices compiled by Bloomberg. That’s the biggest rise in yields since Oct. 17. The bond’s price fell 0.40 centimo to 114.46 centimos per sol.

The U.S. deficit-cutting congressional supercommittee is expected to say today it failed to reach agreement on at least $1.2 trillion in savings, setting the stage for automatic spending cuts. Peru’s finance ministry will evaluate a local bond issue this week after speaking to primary dealers today about market conditions, Manuel Aldave, head of investments at Banco Internacional del Peru in a phone interview from Lima.

“The U.S. failing to reach an agreement on austerity measures is creating unease among investors” and leading them to shun riskier assets, Aldave said.

Banco Internacional del Peru is one of six primary dealers authorized to trade government securities.

The sol was little changed at 2.7006 per U.S. dollar, from 2.7004 on Nov. 18.

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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