Peru Taps Market With Second Euro Bond in Four Months

  • Nation follows Chile, Mexico in offering euro-denominated debt
  • The government raised 1.1 billion euros in October sale

Peru returned to the euro bond market in less than four months to finance next year’s budget amid weak demand for its local debt.

The Andean nation sold 1 billion euros ($1.1 billion) in notes due in March 1, 2030, to yield 3.773 percent, according to a person familiar with the deal who asked not to be identified because the information is private.

Peru is the third Latin American country this year to take advantage of reduced borrowing costs resulting from European Central Bank stimulus, after a combined 3.7 billion euros in sales by Chile and Mexico. The Peruvian currency’s plunge to a 13-year low against the dollar and faster inflation have curbed demand for the government’s local debt, making an overseas issuance more appealing for the government.

The nation’s local debt has lost 17 percent in dollar terms in the past year, compared with an average 12 percent decline for government securities from emerging markets, according to JPMorgan Chase & Co. indexes.

Peter Schottmueller, the head of emerging market and international fixed income at Deka Investment GmbH, said pricing on Peru’s debt is attractive as he bid for the bond. Still, the country is not his top choice among Latin American issuers given its dependency on copper. Prices for Peru’s biggest export have dropped 2.1 percent this year and the metal has lost about half its value in the past five years.

Peru raised 1.1 billion euros in notes due in 2026 at 2.751 percent in October. The yield on that note fell one basis point to 3 percent on Tuesday after reaching a record on Monday.

Mexico raised 2.5 billion euros in two tranches last week including 2031 notes. The yield on that security was little changed at 3.4 percent on Tuesday.

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