Peru FTA Not Seen Helping Bonds

Little fundamental impact is anticipated from Peru’s FTA passing through the US Senate this week by a healthy margin, as expected. The pact, which should be in full-effect by mid-2008, is fundamentally supportive as it will attract foreign investment, say analysts. However the markets impact is forecast to be slight. “We do not expect a significant impact of the approval on the bonds, given the expected result granted by the strong backing already received at the House vote in November,” says Merrill Lynch. “In the short term, its impact on the real economy will be limited, given that 98% of the exports to the US already enter duty-free under the ATPDEA program,” it adds.