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Borrowing Costs Lowest Since November on Greece: Lima Mover

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Feb. 7 (Bloomberg) -- Peru’s benchmark borrowing costs in dollars fell to their lowest since November as Greece made progress on measures to secure international aid, fueling demand for higher-yielding, emerging-market assets.

The extra yield investors demand to own Peruvian government bonds instead of U.S. Treasuries fell seven basis points, or 0.07 percentage point, to 200 at 3:33 p.m. in Lima, according to JPMorgan Chase & Co. That’s the narrowest since Nov. 15. The spread has narrowed 16 basis points this year.

Greece’s government and international creditors are working on the final draft of an agreement on budget and structural measures needed to free up a second aid package, a Greek official said. Yields on 10-year U.S. Treasuries rose to almost a two-week high.

There is increased confidence among investors that “Greece won’t default on its debt and will be able to contain the sovereign crisis, and that growth will slowly come back through the U.S. and China,” said Enrique Alvarez, the head of Latin America fixed-income research at IdeaGlobal.

The yield on Peru’s 6.55 percent bond due March 2037 rose two basis points to 4.8 percent. The security’s price fell 0.25 cent to 125.35 cents per dollar.

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