The Minister of Economy and Finance, Jose Arista announced that the Peruvian government is planning to issue sovereign bonds next year, which will be used to finance the fiscal deficit.
Arista considered that Peru is an active country in the international sovereign bond market, and this assertion is based on the two issues carried out during 2024, and one of them rated as very successful by international organizations.
"What has been done is to reshape the debt profile. We had debts that were due between 2025 and 2031. We have issued a bond for 2039, so the new administration coming after 2026 will find greater fiscal leeway. We will possibly continue with some of this work next year," he added.
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Sovereign bonds are a form of debt issued by a government to obtain financing that it could not be obtained only with taxes. These resources could ultimately be used to carry out infrastructure works. By issuing bonds, the Government promises to return the money to investors with interest on a specific date, called the maturity date.
According to data from the Central Reserve Bank (BCR), the total gross debt of the Peruvian public sector at the end of the third quarter of 2024 reached 345,278 million soles. (About US$ 92.3 billion).
This amount is made up of internal debt of 178,069 million soles (about US$ 47.6 billion) and external debt of 167,209 million soles (about US$ 44.6 billion), and is expected to reach 33.1 % of GDP by the end of 2024. The fiscal deficit is expected to close the year above 3 % of GDP.
A few days ago, the Ministry of Economy and Finance announced that it will issue sovereign bonds domestically for up to 2,969 million 224,000 soles (about US$ 793.75 million) with maturity in 2033.
According to Ministerial Resolution No. 399-2024-EF/52, the domestic issuance of bonds by the National Government will be carried out within the framework of a debt management operation, under the refinancing modality.
Indeed, it has been planned to implement a debt management operation under the modality of refinancing the payment obligations derived from the contractual position transfer agreement under the framework of Emergency Decree No. 013-2024, signed on September 19, 2024, between Petróleos del Perú, the MEF and the Banco de la Nación.
The agreement is implemented through the modality of direct award to the Banco de la Nación in substitution of the Market Makers Program.
The nominal value of the sovereign bond will be 1,000 soles (About US$ 267.3), with maturity on August 12, 2033 and with a fixed annual nominal coupon rate of 7.30 %. The periodicity of the interest payment of the bond will be semiannual.
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