Peruvian Bond Yields Rise to Seven-Week High on Mining Conflict

Peruvian bonds fell, pushing up yields to a seven-week high, 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 two basis points, or 0.02 percentage point, to 5.77 percent at 3:54 p.m. Lima time, according to prices compiled by Bloomberg. That’s the highest yield since Oct. 26. The security’s price fell 0.12 centimo to 113.96 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 extra yield investors demand to own Peruvian government bonds instead of U.S. Treasuries rose seven basis points to 222, according to JPMorgan Chase & Co.

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