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Peru Bonds Fall on Concern Mining Unrest to Dim Growth Outlook

Peruvian bonds fell, pushing up yields for a fourth day, amid concern protests against the country’s biggest mining project may hobble growth next year.

The yield on the nation’s benchmark 7.84 percent sol-denominated bond due August 2020 rose one basis point, or 0.01 percentage point, to 5.76 percent at 12:09 p.m. in Lima, according to prices compiled by Bloomberg. The security’s price declined 0.05 centimo to 114.02 centimos per sol.

President Ollanta Humala fired 10 ministers on Dec. 11, four months into his term, and sought to resume talks with protestors opposed to Newmont Mining Corp.’s $4.8 billion gold project in Peru’s northern Andes. Increased political conflict next year may delay other mining investment and slow economic growth, Barclays Capital Inc. said in an e-mailed report to clients today. It recommended investors reduce their holdings of sol-denominated bonds.

“The cabinet changes have created uncertainty about how the government will manage social conflicts,” said Roberto Flores, head of research at Inteligo SAB, a Lima-based brokerage. “Concern about the risks to the pipeline of mining investments is pushing up yields.”

The sol weakened 0.2 percent to 2.6990 per U.S. dollar, from 2.6945 yesterday, according to Deutsche Bank AG’s local unit.

The Andean country’s gross domestic product will rise almost 7 percent this year, before growth slows to 5 percent to 6 percent in 2012, Finance Minister Miguel Castilla said Dec. 3.

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