Uruguay, Peru file SEC Shelves

Both Uruguay and Peru have filed SEC selves to issue up to $5.56bn in debt between them amid expectations that both sovereigns are likely to favor local-currency trades when they do decide to tap the markets. Peru’s filing to issue of up to $5bn in new debt securities comes some eight months after the Andean country sold $2.5bn in dollar and sol-denominated bonds and after the election victory of left-leaning presidential candidate Ollanta Humala sent bonds and stocks reeling. More recently, however, Peru has seen a relief rally following Humala’s market friendly appointments at the Central Bank and the Ministry of Finance. According to the filing, proceeds are slated for general purposes including financial investments, refinancing, or the retirement of local and external debt. Meanwhile, Uruguay’s move to file an up to $560m debt shelf, as well as an upgrade to BB+ this week by S&P, have raised speculation that the sovereign could try a liability management trade to retire more US dollar debt or simply take a stab at retapping its existing inflation-linked notes. This falls in line with the government’s strategy of de-dollarizing its debt, something that the ratings agencies have also cited as a positive. A reopening of existing UI bonds, currently trading in the 3-4% range, could come at a nice 25bp new issue premium over current trading levels, notes an EM portfolio manager who holds Uruguayan bonds. “There will be lots of interest for local Uruguayan notes,” he adds. Currently, the sovereign has three outstanding UI bonds, its 2018s, 2027s and 2037s. Just yesterday S&P upgraded Uruguay’s sovereign rating to BB+, bringing it in line with Moody’s and Fitch and putting it just below investment grade. Uruguay last came to market in May when it issued JPY40,000 ($493m) in 2021 Samurai notes to yield 1.64%, but it hasn’t been in the broader market since late 2009. Meanwhile, the sovereign has played down any talk of issuance. “The augmentation of the shelf was done b