Sovereign Bond of the Year and Local Currency Deal of the Year: Peru

Sovereign Bond of the Year and Local Currency Deal of the Year: Peru

In recent years, Peru has taken steps to develop its domestic debt market with new benchmark issues and well-executed liability management exercises.

In December 2018, the sovereign achieved a new milestone, selling 10.35 billion in Peruvian soles ($3.06 billion) in what was at the time the largest debt sale in local currency for an emerging market. The Euroclearable bonds effectively reopened the international capital markets for Latin American issuers to sell debt in local currencies after a volatile period across emerging markets.

Bookrunners JPMorgan, Morgan Stanley and Scotiabank opened the pricing at 6.125%, but strong demand brought the yield down to 5.95%, with foreign investors taking between 65% and 70% of the bonds and local buyers scooping up the rest. Peru had initially postponed the deal while markets abroad remained choppy.

“We have been steadily working to increase the percentage of debt in soles in our portfolio,” says José Olivares, public treasury director at Peru’s economy and finance ministry. “And we will continue to keep our focus on local currency issuances going forward.”

In June 2019, Peru returned to the market, getting record-low yields on $2.5 billion in new bonds. The sovereign sold $1.75 billion in sol-denominated 2034 notes at 5.4% and $750 million in dollar-denominated 2030 notes at 2.84%. The dollar portion marked Peru’s return to the dollar bond markets after four years, and saw it lock in the lowest yield by a Latin American sovereign issuer in years.

Still, Olivares says the country is unlikely to be a prolific issuer in the dollar market.

He says this year Peru hopes to add an environmental, social and governance (ESG) element to its funding strategy, possibly issuing a green, sustainable or social bond. “We have to gauge investor demand for the different types of bonds and in which currency,” Olivares says. “If we could somehow find a way to carry out the transaction in local currency -- even better.”

Awards accepted by: Jose Olivares, Public Treasury Director 

Sovereign Bond of the Year

Date: June 2019

Size: US$ 2.5 billion

Supporting Financial Institutions: HSBC; Morgan Stanley; Santander; Scotia Capital; Scotiabank

Supporting Law Firms: Estudio Echecopar; Simpson Thacher & Bartlett; Garrigues; Shearman & Sterling

Local Currency Deal of the Year

Date: December 2018

Size: US$ 3.1 billion

Supporting Financial Institutions: Morgan Stanley; Santander; Scotia Capital; Scotiabank; J.P. Morgan

Supporting Law Firms: Estudio Echecopar; Simpson Thacher & Bartlett; Garrigues; Shearman & Sterling

All supporting financial institutions and law firms were transmitted to LatinFinance by the award category winners. For updates please email awards@latinfinance.com