Peru raised $3 billion in the international bond market on Thursday in a two-part sale of US dollar-denominated notes that was six times oversubscribed, market sources told LatinFinance.
The sovereign sold $1.25 billion worth of 10-year bonds and $1.75 billion worth of 30-year notes, the sources said.
The Peruvian government priced the 5.375% 2035 notes at 99.929 to yield 5.384%, or 140 basis points over US Treasuries, after opening the initial price talk in the 180 basis points area, according to a source familiar with the deal. It priced the 5.875% 2054 notes, meanwhile, at 99.109 to yield 5.939%, equal to a spread of 165 basis points over USTs, after opening the deal at around 205 basis points, the source said.
Demand peaked at $18 billion, split between $8 billion for the 2035s and $10 billion for the 2054s, the source added.
Zulfi Ali, a portfolio manager at PGIM Fixed Income in New Jersey, said there was pent-up demand from investors given the Peruvian government last issued USD notes in October 2021.
Bruno Rovai, a sovereign strategist at Macquarie Asset Management, said that while Peru isn’t a frequent issuer and there’s a scarcity of bonds at the long-end of its yield curve, the country’s recent fiscal performance eroded the issue’s appeal.
“From a fundamental perspective, we dislike the credit based on the poor fiscal performance of the past 18 months or so, as we expect the administration to miss its already-revised target for the nominal deficit this year,” he said.
Bank of America, Citi, JPMorgan and Santander were joint bookrunners on the bond offering, according to a prospectus filed with the US Securities and Exchange Commission.
The government will use the proceeds to fund the budget for this year, the document said.
Peru’s latest deal follows the sale of local currency sustainable bonds in the international market on June 18.