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Peru returns to global bond market to raise $3 bln

Peru returns to global bond market to raise $3 bln

Posted by Juan Gavasa on October 31, 2014

Peru said it sold 7.41 billion soles ($2.54 billion) worth of new 10-year bonds, to be settled in dollars, with a 5.7 percent coupon on Thursday - making its first foray into global markets since 2012.

Taken together with the reopening of a 2050 dollar-denominated global bond to raise $500 million, the two deals marked the biggest splash that Peru has ever made in the bond market.

The 2050 bond reopened at a 4.9 percent yield and a spread of 185 basis points over U.S. Treasuries, according to IRF. "The finance ministry today carried out the biggest integral debt operation in the history of the Republic," the government said in a statement on the two operations totalling 8.86 billion soles ($3.04 billion).

Peru is tapping global markets for the first time in two years to support public spending amid sluggish economic growth and to raise the maturity and ease the cost of its debt with bond swaps and buy-backs. The $500 million in reopened debt is to be used exclusively for prefinancing the 2015 budget, the finance ministry said.

The global minerals exporter, rated A3/BBB+/BBB+, expects a fiscal deficit next year equal to 0.4 percent of gross domestic product, following its estimated economic expansion of about 3 percent this year. Peru's economy grew by more than 6 percent on average over the past decade, but lower prices and softer demand for minerals have hit exports and eaten away at private investment.

 ($1 =2.918 soles)

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