Peru’s benchmark borrowing costs in dollars rose the most in three weeks as a report confirmed a contraction in European economies and as investors weighed the success of Greece’s debt swap, curbing demand for higher-yielding, emerging-market assets.
The extra yield investors demand to own Peruvian government bonds instead of U.S. Treasuries rose seven basis points, or 0.07 percentage point, to 194 at 11:34 a.m. Lima time, according to JPMorgan Chase & Co. That’s the steepest rise since Feb. 10.
The euro area’s fourth-quarter gross domestic product fell 0.3 percent from the third quarter, the European Union’s statistics office said today, confirming an initial estimate published on Feb. 15. Bondholders owning a fifth of Greece’s debt agreed to an exchange, even as the government has set 75 percent participation as the threshold for proceeding with the plan.
“A complete demise of this Greek package would lead to a very harrowing overall circumstance in Europe,” said Enrique Alvarez, the head of Latin America fixed-income research at IdeaGlobal in New York. “The peripheral recession is starting to look quite dreary. Credits such as Portugal and Spain are starting to show the wear that austerity measures can take on an economy.”
The sol was little changed at 2.6740 per U.S. dollar, from 2.6750 yesterday, according to Deutsche Bank AG’s local unit.
The yield on the nation’s benchmark 7.84 percent sol-denominated bond due August 2020 fell one basis point to 5.46 percent, according to prices compiled by Bloomberg. The security’s price gained 0.07 centimo to 115.86 centimos per sol.