Peru will look “opportunistically” at market
windows, but is unlikely to advance with any kind of liability management
exercise given the recent tough conditions, Carlos Blanco, the country’s new
head of public credit, has told LatinFinance. 

“We’re
always looking at different sources. We may opportunistically look at different
markets, but at this point, we don’t have anything that is already decided. We
are following very closely the events that are happening at this point, and
we’ll see.””Not with the market conditions as they are at this
point. We don’t see a window of opportunity,” says Blanco. 

The A3/BBB+/BBB+ sovereign surprised markets by
issuing a 4.125% $1.25bn 2027 note in mid-August, a traditionally limited
trading period and amid volatility, as Chinese stocks crashed before. Nonetheless, the sovereign wanted to advance with a deal before further uncertainty grew ahead of the US Federal Reserve’s next meeting, on September 17.

“We knew there is going to be a large amount liquidity
coming into the market after summer, but we had the issue with interest rates
with the Fed,” said Blanco, who took up
the job a week and a half before the bond sale.

“We didn’t expect what happened a couple days after. It was
a good timing, retrospectively. We feel really glad a couple days before the
big events.”

The sovereign’s 7.35% $1.25bn 2025 notes were trading well above par at the time of the country’s new issue, and
some DCM sources said they expected the country to buy back or exchange part of
the notes to make the country’s debt more liquid. 

In March, Peru switched about $13m of the 2025 bond into its
sol-denominated 6.95% 2031 and bought back $228m of the
instrument.

With the recent new issue Peru has prefunded almost all of
its debt services requirements for next year, and the country will use local
currency issues or funds from other resources to fill the gap, Blanco said.

Late last month, President Ollanta Humala asked Congress to
approve a PEN138.49 billion budget for 2016, a 6% increase compared to
2015. At the same time, Peru’s finance ministry cut its forecast of gross domestic product growth to 3%, from 4.2%, on the back of
waning commodity prices. LF