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May 26, 2004

Peru Completes International Funding
The Republic of Peru completed its external funding needs in April when it successfully issued a $500 million, 12-year bond. The bond was priced to yield 395 basis points over US Treasuries, with a coupon of 8.38%. Citigroup managed the sale. The deal was upsized from an original $300 million. The government will use the proceeds to finance its budget deficit of 1.4% of GDP. Peru's 2004 funding program called for raising $1 billion from the international capital markets, but the country succeeded in pre-financing half that at the end of last year. Standards & Poor's rated the April bond BB-, and says the country's macroeconomic fundamentals are improving, despite President Alejandro Toledo's growing unpopularity. The government has steadily cut its budget deficit from 1.9% of GDP last year and 3.2% of GDP in 2000. Growth has averaged 4% a year for the last three...

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