Peru’s ability to command deep demand for long-dated local currency debt in 2025 stood in sharp contrast to the political volatility dominating headlines. While Congress impeached President Dina Boluarte in October—making her the third Peruvian president removed since 2020—and the country cycled through yet another interim leader ahead of crowded elections in 2026, investors focused instead on a macroeconomic story that remained unusually solid for the region.
Economic growth exceeded 3% in 2025, inflation fell to 1.5%, its lowest level in eight years, and the sol posted its strongest annual performance since its adoption in 1991. Tax revenues rose by 10.7%, exports were on track to surpass $90 billion, and the fiscal deficit returned to target after a two-year overshoot. Rating agencies acknowledged the political noise but emphasized continuity in policy and buffers. “Political uncertainty rose after Congress impeached and removed President Boluarte on Oct. 10. However, macroeconomic stability has remained broadly intact, supported by prudent monetary management, strong external buffers and solid growth,” according to Fitch Ratings.
That resilience translated directly into one of the most consequential sovereign local currency transactions in Latin America in recent years: a PEN10.0 billion ($2.7 billion) 6.850% senior unsecured bond due 2035. The transaction, which wins the award for Sovereign Local Currency Deal of the Year, underscored Peru’s capacity to mobilize domestic and international demand in its own currency at a critical moment in the political cycle.
Originally conceived as a roughly PEN7.0 billion operation, the deal was upsized as demand built, finishing around 1.4 times oversubscribed. The final orderbook comprised about 50 orders, including several cornerstone bids well above PEN300 million. The bond priced with an estimated 25 basis points of new issue concession to the secondary curve, a level viewed as disciplined given duration, volatility and the emerging market backdrop.
At 6.850%, the 2035 notes represented the tightest pricing achieved by Peru in the local market since 2019 and established a new on-the-run benchmark at the 10-year point of the sol curve. It was the country’s second-largest sol-denominated issuance on record and extended the local curve at a time when many peers were retreating from duration risk.
Crucially, the transaction anchored a broader liability management strategy aimed at reducing dollarization and smoothing Peru’s near-term maturity profile. Proceeds were deployed alongside exchange and buyback operations to retire shorter-dated domestic and external obligations, easing refinancing pressure over the next five years.
“This debt liability operation represents the most important recent effort to de-dollarize the public debt and reduce the concentration of debt coming due in the next five years through buybacks and exchanges,” says Alonso Segura, head of the country’s Fiscal Council and a former economy and finance minister.
Execution sequencing mattered. The sol transaction was deliberately prioritized and completed ahead of a return to the global markets later in June, allowing the sovereign to maximize local currency issuance before addressing residual external funding needs. Relative value considerations reinforced that approach, with sol-equivalent yields on hard-currency issuance sitting well wide of domestic benchmarks.
The local currency deal was complemented by a dual-tranche $3.0 billion US dollar transaction and concurrent tender and exchange offers, extending duration and enhancing liquidity. Together, the operations completed Peru’s 2025 funding program while providing a liquidity buffer ahead of a sensitive electoral year.
For Peru, the success of the PEN10.0 billion 2035s was less about optics and more about proof of concept. In a year defined by political churn, the sovereign demonstrated that disciplined macro policy, transparent execution and thoughtful liability management can unlock deep pools of local currency liquidity at scale.
Republic of PeruPEN10.0 billion 6.850% Senior Unsecured Notes due 2035
Joint Bookrunners: BNP Paribas; Citi; HSBC; Santander
Counsel to Issuer: Baker McKenzie; Garrigues
Counsel to Banks: Davis Polk; Rubio, Leguía, Normand y Asociados