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Peru Borrowing Costs Fall for Fourth Day on Europe Debt Optimism

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Jan. 23 (Bloomberg) -- Peru’s benchmark borrowing costs in dollars fell for a fourth day, heading for the longest streak of declines in three months, as optimism European leaders will contain the region’s debt crisis boosted demand for higher-yielding assets.

The extra yield investors demand to own Peruvian government bonds instead of U.S. Treasuries fell two basis points, or 0.02 percentage point, to 212 at 11:02 a.m. Lima time, according to JPMorgan Chase & Co. The last time the spread narrowed for four straight days was in mid-October.

European officials are crafting a long-term plan today to tackle the region’s debt crisis as talks on a Greek debt swap entered a second week. Negotiations on Greek debt are making “tangible progress,” French Finance Minister Francois Baroin told reporters in Paris. German Finance Minister Wolfgang Schaeuble said he’s confident the discussions will be completed.

“There’s been a improvement in risk appetite since the beginning of the year,” said Felipe Hernandez, an analyst at RBS Securities Inc. in Stamford, Connecticut. “As the rally in asset prices has extended over the last two weeks, funds and investors on the sidelines with plenty of cash are starting to react.”

The yield on the nation’s benchmark 7.84 percent sol-denominated bond due August 2020 fell one basis point to 5.71 percent, according to prices compiled by Bloomberg.

The sol was little changed at 2.6910 per U.S. dollar, from 2.6915 on Jan. 20, according to Deutsche Bank AG’s local unit.

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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