Local currency – Peru: Safety in numbers

May 1, 2013

Despite renewed fervor for the sol market, Peruvian companies are still looking further afield for liquid deals

By Karen Schwartz

It's not hard to see the potential for Peru's local debt markets.

Investors are increasingly upbeat about the country's macroeconomic outlook. The rise of the middle class heralds a boom for consumer-oriented companies. Funding costs for borrowers are falling, translating into more liquid curves. And, despite some weakening this year, the sol has been steadily appreciating since 2009.

But although the market for debt in soles has existed for more than a decade, until now it has lacked depth and volume.

That is changing. In 2012, issuance in the local markets nearly doubled: companies issued 2.1 billion soles ($805 million) of debt, compared with 1.3 billion soles in 2011.With GDP growth averaged above 5%, debt sales in soles are poised to continue growing.

"We see medium-sized companies are increasingly using the [local and international] capital markets as a funding alternative," says...

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“The crisis has been a setback for reserve diversification."

Jan Dehn, Ashmore Investment Management