Peru stays put amid wider market sell-off

Peru stays put amid wider market sell-off

Bonds Corporate & Sovereign Strategy Capital Markets Peru

After wrapping up a roadshow a day earlier, Peru steered clear of the bond market on Thursday after US Treasuries swelled and global indexes opened in the red.

Investors, however, remain positive about a new bond issuance from the Andean sovereign, with two saying they expected very minimal shifts in pricing despite the market volatility.

Peru's strong balance sheet and the performance of its existing securities bode well for the A3/BBB+/BBB+ rated issuer that is looking for debt in dollars and soles.

The Andean nation’s 2033 bonds were spotted at roughly 145bp over US Treasuries on Thursday morning, roughly 15bp wide of where the notes were trading when Peru started its roadshow last week, sources said.

One analyst said fair value on a new issue concession from Peru will vary depending on the term of the new notes, but estimated a 4.5bp concession for a new 10-year, dollar-denominated bond.

Peru's 2027 dollar bond was seen at 77bp on Thursday morning, roughly 10bp wide of where the notes were trading two weeks ago, a source said.

An analyst that spoke with LatinFinance, said an increase in yields for the Peruvian notes, despite a decrease in yields in US treasury notes, was expected because of the scarcity of new issuances from Latin America and the wider emerging markets.

Since starting investor meetings, Peru's sol-denominated 2032 bond widened 5bp to 270bp over Treasuries.


Image: Palacio de Gobierno, Lima. Antonio Atalaya/ Flickr