Category: Peru

Peru is set to remove tax exemptions on capital gains in the stock market and interest on bonds, according to the country’s finance minister, Luiz Carranza. From 2009, a tax rate of 5% will be applied to capital gains on stock investments. However, capital gains and interest on government-issued paper will remain tax exempt.

Preliminary figures from Peru’s Central Bank show that February’s trade surplus widened to $473 million, 10% up on the same month last year. Total exports rose to $1.83 billion, up 26% year on year, set against imports of $1.36 billion, 32% up on the same month last year.

Banco de Credito del Perú and BBVA Banco Continental have benefited from the improving conditions of the sovereign rating of the Republic of Peru and have both had their Moody’s B1 long-term foreign currency deposit ratings placed on review for possible upgrade. The Agency also placed on review for possible upgrade the Ba2 rating for the $120 million in subordinated notes maturing in 2021 issued by Banco de Credito del Perú’s Panama branch.

Moody’s Investor Service has placed Peru’s BB+ foreign currency rating on review for a possible upgrade. Peru’s sovereign debt credit rating got a boost on Tuesday after Fitch Ratings changed its outlook on the country’s ratings to positive from stable.

Former Peru prime minister, Pedro Pablo Kuczynski has joined the emerging market investment specialist The Rohatyn Group as a senior advisor. Kuczynski will help develop private equity investments with a focus on Latin America, said the firm. Prior to becoming prime minister of Peru in 2001, Kuczynski served as minister of economy and finance, as well as minister of energy and mines. From 1994 to 2001, he was president and chief executive of the Latin America Enterprise Fund, a private equity firm.

Peru’s sovereign debt credit rating got a boost on Tuesday after Fitch Ratings changed its outlook on the country’s ratings to positive from stable, commenting that it believed “favorable public finance and external account trends will continue,” raising the likelihood of an upgrade “over a horizon of two years”. However, the agency warned that the concentrated nature of the country’s export base in commodities remained a “key credit weakness”. Peru is currently rated BB+ by Fitch, just one level below investment grade. The sovereign also carries a BB+ rating from Standard & Poor’s.

In Peru, the price of food, clothing and education drove up prices in February by 0.26%, the fastest rise in 10 months. Annual inflation for the 12 months through February fell to 0.36%, the lowest rate seen since August 2002.

Luis Alva Castro has been named the new interior minister of Peru. His first move following his appointment was to announce the creation of external committees to manage certain public purchases. He replaces Pilar Mazzetti who resigned following allegations of irregularities in the acquisition of police vehicles by the ministry, although there was no suggestion of personal involvement. Alva Castro served in Alan García’s first government (1985-1990), before running as a presidential candidate for APRA in 1990.

Peru bought back Friday 60% of $3.6 billion in outstanding 2012 and Brady bonds it was targeting in an exchange. Just over $1 billion of aggregate principal of the outstanding $1.4 billion of 2012s were swapped for the following: $833 million in new 8.375% 2016 bonds, $85 million of 8.75% 2033 bonds and $71 million cash. Of the $2.2 billion in Bradies, $691 million in PDIs and $684 million in FLIRBs were exchanged for new 2037 notes and a small portion of cash. Also in the Brady category, $82 million in discounts and $11 million in Pars were exchanged for 2037 notes and more significant portions of cash. Citi and Deutsche were dealer managers.