Peru’s Wall Street Boys Have JPMorgan Flashing Buy Sign on Bonds

  • New President Kuczynski to boost infrastructure investments
  • Country’s notes have outperformed emerging-market debt

Less than a month after Peru inaugurated Pedro Pablo Kuczynski as president, JPMorgan Chase & Co. is urging investors to load up on the country’s bonds.

The move come as Kuczynski, who was a managing director at First Boston Corp. in the 1990s, plans to ramp up infrastructure and mining investment to propel growth in an economy already posting the fastest expansion in South America. He’s also bolstered investor confidence by appointing Alfredo Thorne, a former head of Latin American research at JPMorgan, as finance minister.

Peru’s notes have soared 19 percent this year as Kuczynski’s election victory in June sparked optimism the country will be able to shrink a budget deficit that has swelled to a 16-year high amid falling copper and gold exports. On Aug. 10, S&P Global Ratings affirmed Peru’s BBB+ rating, citing expectations Kuczynski will maintain policies that have spurred the fastest growth and lowest inflation among Latin America’s major economies for more than a decade. JPMorgan analyst Franco Uccelli says investors should boost Peru bond holdings to overweight as they will outperform emerging markets.

“The market remains underexposed to Peru,” Uccelli said by phone. “It’s a sound, fundamental story with improved political prospects and a lot of momentum behind it.”

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