Peru Bonds Post First Five-Day Gain in Three Weeks on Refuge Bid

Peruvian bonds posted their first five-day advance in three weeks, following Treasuries higher, as concern that Europe’s debt crisis will get worse boosted the haven appeal of government securities.

The yield on the nation’s benchmark 7.84 percent sol-denominated bond due in August 2020 fell three basis points, or 0.03 percentage point, to 4.55 percent, extending the decline since Aug. 17 to eight basis points, according to prices compiled by Bloomberg. That was the first decrease since the week ended Aug. 3. The price rose 0.19 centimo to 121.64 centimos per sol in trading today.

“Peru, like Mexico, is following the trend in Treasuries,” said Alberto Jabiles, a trader at BBVA Banco Continental in Lima. “If Treasury yields fall, they can rally here, and if Treasury yields rise, they may rise here too. It used to be the reverse, but the relationship has changed a little. Peru and Mexico have good fiscal positions, reserves and don’t have much debt,” boosting their appeal in times of instability, Jabiles said.

The sol was little changed at 2.6140 per U.S. dollar at today’s close, according to Deutsche Bank AG’s local unit. The currency has gained 1.9 percent since June 29, the strongest advance among major Latin American currencies tracked by Bloomberg behind Chile’s peso.

Treasury 10-year notes pared gains today as investors reacted to an Aug. 22 letter Federal Reserve Chairman Ben S. Bernanke sent to the chairman of the House Oversight and Government Reform Committee in which he said “there is scope for further action” to spur the economy.

The debt was supported by a bid for safety on concern the European Central Bank’s plan to buy euro-area government bonds to curb financial turmoil will be delayed.