Category: Peru

Peru’s trade surplus in July widened to record levels of just over $1 billion, a 40% increase from the previous month and 111% up on July 2005. The surplus was driven by a growth in exports, which rose to $2.2 billion for the month, against imports of $1.1 billion. The growth was led by the mining sector, in particular copper and gold, continuing a trend seen in previous months. Exports for the first seven months of the year were up 42%, compared with the same period in 2005, with imports increasing only 7.6%.

GBH-Swissport Aeropuertos, a consortium led by Spanish-owned Swissport, has won the concession to operate 12 of Peru’s regional airports with a commitment to invest at least $115 million and possibly up to $220 million. The 25-year concession has the option to be extended up to 60 years. Swissport was the only bidder remaining following the withdrawal of Colombian group Aeropuertos Unidos. Swissport is the world’s largest airport ground and cargo handling service provider, with a presence in 180 airports worldwide. GBH Investments is a local infrastructure group.

Peruvian toll-road concessionaire IIRSA Norte has successfully sold $213 million of securitized bonds under 144A rules in the US to mainly European and US investors. The bonds are backed by the issuance of certificates of annual payments (so-called certificados de reconocimientos de pago annual de obras – CRPAOs) made to the concessionaire by the government of Peru to compensate for construction progress. This the first time a Peruvian company has raised financing via this type of financing mechanism, according to law firm Roselló, which acted as legal advisor to IIRSA Norte. Although the CRPAOs are freely transferable, they do not constitute sovereign debt of Peru which means the country’s indebtedness is not affected. The funds raised will be used to finance the construction of the 960-kilometer stretch of Amazonas Norte highway, part of a larger project – Interoceánica – which is part of the plan for the Integration of the Regional Infrastructure of South America (IIRSA).

Peru has issued $120.7 million worth of bonds in the local market. The government issued two local-currency bonds: one maturing May 2015 to yield 6.9% for $46.5 million and another maturing August 2026 with an interest rate of 7.55% for $74.4 million. Both issues were oversubscribed with demand reaching $113 million and $124.7 million respectively. The bond issues are part of the Sovereign’s plan to raise $660 million this year to meet its financing needs

Peru’s newly installed government has said it is looking at ways to pay down some of its more expensive debt to multilaterals and extend the maturity on other debt to lower the country’s debt-servicing costs. By improving the debt profile of its external debt, Peru will be following a move made by several other Latin American countries recently. It will also be continuing a strategy begun under the previous administration of Alejandro Toledo which prepaid around $2.4 billion of its external debt, paying down $1.5 billion of its debt to the Paris Club group of creditors and settling an $830 million debt with Japan Peru Oil Co (Japeco) taken out in the 1970s. The debt payments were financed by selling global bonds into the international and local markets.

Enrique Cornejo has been named the new head of Peru’s state-owned Banco de la Nación by President Alan García to replace outgoing Kurt Burneo. Cornejo, an economist, was the chief architect of APRA’s economic plan in the lead-up to the last elections which saw the party’s Alan García victorious.

José Arista has been appointed deputy finance minister of Peru, replacing the empty seat left by Waldo Mendoza who resigned on July 26 after just under a year in the job. Arista previously served as head of Lima’s tax service administration (SAT) and as the budget director at the finance ministry.

Peru’s new president, Alan García, has introduced his first austerity measure in a drive to control spending. The president announced he would be halving his salary and those of Cabinet ministers, congressmen and senior public officials to cut the public wage bill by around $30 million a year. García’s first days in office have been well received by the markets which have been stable to upbeat. President García still has much to prove, though, particularly to those who remember the economic mismanagement of his first term in office (1985-1990), which left Peru with hyperinflation and defaulting on its debt.

Peru’s president-elect Alan García takes over the reins today, hoping to banish memories of the last time he was in charge. Supporters of the former president, who left his country an economic disaster at the end of his first presidency (1985-1990), say this time around he will not make the same mistakes. García, who had already named Jorge del Castillo as his premier, Luis Carranza as finance minister, and Jose Antonio Garcia Belaunde as foreign minister, revealed more Cabinet appointments. Juan Valdivia will take the important post of minister of energy and mines, while Hernan Garrido Lecca becomes minister of housing and construction. Independents Rafael Rey is to head up the ministry of production and Allan Wagner is named defense minister. Economics professor Mercedes Araoz takes over the trade portfolio, Pilar Mazzetti is the new interior minister, and Veronica Zavala is appointed minister of transport and communications.

Peruvian gold mining company Yanacocha has sold $100 million of bonds in the local market. The bonds were issued in two series, each with a maturity of 10 years. The first series, totaling $58 million, were sold with a fixed coupon rate of 7%; the second, totaling $42 million, were sold with an interest rate of Libor plus 1.4375%. Yanacocha, which produces around half of Peru’s gold output, is owned by Newmont Mining Corp of the US. It is Latin America’s largest gold producer. The bonds were placed by local firm Credibolsa.