Bank: Demand For Peru's Sol-Denominated Bonds Seen Strong
LIMA -(Dow Jones)- Demand for domestically traded sol-denominated Peruvian sovereign bonds is expected to continue to be strong, Banco de Credito said Thursday.
A series of measures aimed at cutting down on what the Central Reserve Bank of Peru has called speculative attacks on the local currency combined with volatile market conditions have helped increase demand for the government bonds, it said in a report.
Among the central bank measures was one to issue non-negotiable certificates of deposit, which cut into the demand for central bank paper by investors looking for highly liquid sol-denominated instruments.
Peru's sol has appreciated strongly in recent years and especially since the start of this year, and the central bank has worked to ease brusque movements in the exchange rate by intervening to purchase U.S. dollars and more recently with other measures.
Banco de Credito said foreign investors have increased their purchases of bonds on the short end and the long end of the yield curve.
It pointed to increased foreign investor demand for the 2008, 2011 and 2037 bonds.
"Since the start of February, the trend towards an increase in the positions of sovereign bonds from foreign investors has continued, especially in the short term," it said.
"As well, it is expected that there will be strong demand for sovereign bonds if these are auctioned shortly to finance a prepayment of Brady bonds," it added.
The Finance Ministry has announced plans to redeem a series of outstanding Brady bonds in March.
Banco de Credito said that local pension funds, or AFPs, have been selling the sovereign bonds across the yield curve, while local banks have sold off short-term paper while increasing positions in longer-term bonds.
Peru's Finance Ministry recently received approval to place up to 2.88 billion soles ($993 million) in sovereign bonds in the domestic market before the end of the year.
LIMA -(Dow Jones)- Demand for domestically traded sol-denominated Peruvian sovereign bonds is expected to continue to be strong, Banco de Credito said Thursday.
A series of measures aimed at cutting down on what the Central Reserve Bank of Peru has called speculative attacks on the local currency combined with volatile market conditions have helped increase demand for the government bonds, it said in a report.
Among the central bank measures was one to issue non-negotiable certificates of deposit, which cut into the demand for central bank paper by investors looking for highly liquid sol-denominated instruments.
Peru's sol has appreciated strongly in recent years and especially since the start of this year, and the central bank has worked to ease brusque movements in the exchange rate by intervening to purchase U.S. dollars and more recently with other measures.
Banco de Credito said foreign investors have increased their purchases of bonds on the short end and the long end of the yield curve.
It pointed to increased foreign investor demand for the 2008, 2011 and 2037 bonds.
"Since the start of February, the trend towards an increase in the positions of sovereign bonds from foreign investors has continued, especially in the short term," it said.
"As well, it is expected that there will be strong demand for sovereign bonds if these are auctioned shortly to finance a prepayment of Brady bonds," it added.
The Finance Ministry has announced plans to redeem a series of outstanding Brady bonds in March.
Banco de Credito said that local pension funds, or AFPs, have been selling the sovereign bonds across the yield curve, while local banks have sold off short-term paper while increasing positions in longer-term bonds.
Peru's Finance Ministry recently received approval to place up to 2.88 billion soles ($993 million) in sovereign bonds in the domestic market before the end of the year.
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