Category: Peru

Peru is just a few months away from launching its Repo market, José Arista Arbildo, vice minister of finance, tells LatinFinance. “We hope that by the end of the year, that market will be ready to go,” says Arista, who adds that the exact timing for a first trade is not etched in stone yet. The program will begin with providing repo for the sovereign’s most liquid local currency bonds, including the 2037, 2026, 2020, 2017, 2015, 2011 and 2008 maturities. The immediate goal is to give long-dated instruments liquidity and stimulate secondary market trading, says the minister. Currently, the government is working with other market participants, including the Central Bank, to standardize the repo contract and get the platform ready to start trading.

The Peruvian government is hoping to push through a new law to make public-private partnerships a more viable piece of the government’s effort to stimulate infrastructure investment. While details of the law are still unclear, the goal is to push it through Congress by the end of the year, José Arista Arbildo, Peru’s vice minister of finance, tells LatinFinance. Between now and the end of 2008, Peru will look to have $3bn worth of investment in infrastructure projects, including ports, airports and roads.

Peru got a shot in the arm Friday with a promotion to investment grade by DBRS, the Toronto-based rating agency. The agency gave it a BBB (low) with a stable outlook and lauds the country’s sustained economic growth and declining debt burden within a framework of fiscal discipline and sound monetary policy. “Peru’s high reserve levels, low debt-service requirements and flexible exchange rate provide an adequate cushion to absorb potential external shocks during the administration of President Alan García,” says DBRS. Gross public debt-to-GDP has declined from 47% in 2003 to less than 30%, due to fiscal prudence, adept liability management and high GDP growth, it adds. The government’s target is to reduce it to 25% of GDP by 2010.

Peru got a shot in the arm Friday with a promotion to investment grade by DBRS, the Toronto-based rating agency. The agency gave it a BBB (low) with a stable outlook and lauds the country’s sustained economic growth and declining debt burden within a framework of fiscal discipline and sound monetary policy. “Peru’s high reserve levels, low debt-service requirements and flexible exchange rate provide an adequate cushion to absorb potential external shocks during the administration of President Alan García,” says DBRS. Gross public debt-to-GDP has declined from 47% in 2003 to less than 30%, due to fiscal prudence, adept liability management and high GDP growth, it adds. The government’s target is to reduce it to 25% of GDP by 2010.

Sumitomo Metal Mining has established a Peru subsidiary, based in Lima. Sumitomo metal Mining Peru is headed by Kazuya Okada. The company’s Peruvian mining operations, started in 2006, had been handled through its Santiago office.

BBVA’s Peruvian arm BBVA Continental is looking to raise $250m through an A/B loan. The IFC will take a $100m A piece, while a $150m B loan will be syndicated out by lead bank Standard Chartered, say bankers close to the process.

Peru’s Mibanco, the microfinance bank, recently launched a $30m syndicated B loan, following a bilateral $29m IFC A loan in June 2006. Mibanco, 6.5% owned by the IFC, is seeking participation via $5m lead arranger tickets and $3m arranger tickets. The deal will mark the first syndication for a LatAm microfinance institution, and interest is heard to be strong, as it would give participants exposure to a new asset class, and one that is relatively uncorrelated to the rest of the banking system in Peru. Wachovia and the IFC are leading the B loan.

Banco de Crédito del Peru has priced a $160m 2022 NC10 sol-denominated subordinated bond issue at par to yield 7.17%, or 85bp over the sovereign. Morgan Stanley was the lead on the Baa3/BB+ issue.

Peru has left the reference interest rate unchanged at 5.0% in its monthly monetary policy meeting held last week, following an inflation hike it views as transitory. “It is more likely than not (probability of more than 50%) that the central bank will raise the reference interest rate by another 25bp (to 5.25%) before year-end,” says Goldman Sachs.

Toronto-based Iberian Minerals is buying a copper mine in Peru from Dutch metals trader Trafigura Beheer. Iberian will pay about $119m in shares for the Condestable project, south of Lima. In the deal, Trafigura increases its stake in Iberian to 40%, from 20%., and maintains a 46% net profit interest from 2011 to 2014. The transaction awaits Trafigura minority shareholder approval.