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Peru Yields Fall Most in Month as Central Banks Boost Liquidity

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Nov. 30 (Bloomberg) -- Peruvian bonds rose, pushing down yields the most in a month, as demand for higher-yielding assets climbed after central banks lowered the cost of emergency dollar funding in an effort to ease Europe’s debt crisis.

The yield on the nation’s benchmark 7.84 percent sol-denominated bond due August 2020 fell five basis points, or 0.05 percentage point, to 5.70 percent at 2:43 p.m. Lima time, according to prices compiled by Bloomberg. That’s the yield’s steepest fall since Oct. 27. The security’s price rose 0.34 centimo to 114.47 centimos per sol.

Six central banks led by the Federal Reserve moved to ease strains in markets today after the cost for European banks to fund in dollars rose to the highest levels in three years as concerns about a possible breakup of the euro area increased.

The measure sparked “a rally in risky assets,” said Bret Rosen, a Latin America strategist at Standard Chartered in New York.

The extra yield investors demand to own Peruvian government bonds instead of U.S. Treasuries fell 11 basis points to 227, according to JPMorgan Chase & Co.

The sol strengthened 0.2 percent to 2.7005 per U.S. dollar from 2.7060 yesterday, according to Deutsche Bank AG’s local unit.

Peru’s central bank purchased dollars today for the first time since Nov. 18 to slow the sol’s advance. The bank purchased $114 million and paid an average 2.7 soles per dollar, it said on its website.

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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