The Republic of Peru has received one of the most prestigious international recognitions in the capital market granted by the International Financing Review (IFR) —a global provider of financial intelligence part of the Refinitiv group.
This issuance took place in a challenging context after having overcome a short period of political instability, which later led to greater tranquility in financial markets and allowed the government to take advantage of windows of opportunity relying on good financing conditions.
Last November, Peru issued a total of US$4 billion by placing three new references in dollars, the 2032 Global Bond at a coupon rate of 1.862%, the 2060 Global Bond at a coupon rate of 2.78%, and the 2121 Bond Global at a coupon rate of 3.23%.
The placement of the bond over 100 years represented the longest-term bond ever issued in the country (the longest bond at the time was the 40-year bond) and in the world, at a minimum historical rate for that term.
Likewise, the coupon obtained for the 12-year bond was the lowest coupon for a dollar offer from a Latin American sovereign issuer.
Success
The success of the operation was motivated by the great demand from global investors, which amounted to around US$15 billion.
This made it possible to reduce the initial rate levels announced for the transaction and reflected the confidence of global investors in the macroeconomic fundamentals of the Peruvian economy, in the long-term prospects and the responsible management of public finances.
The demand came mainly from foreign investors, with a 93% participation.
The distribution of demand by region was 44% coming from investor accounts in the United States, 32% from Europe, as well as 24% from other regions such as Asia, North America, and Latin America.
The issuance responded to the need for financing —at a competitive cost— taking advantage of the windows of opportunity in financial markets, with the aim of financing expenses related to the prevention and containment of COVID-19, as well as the economic reactivation and care of expenses foreseen in the Public Sector Budget for the Fiscal Year 2020, in accordance with the approvals contained in the Urgency Decree No. 051-2020.
This issuance took place in a context of considerable uncertainty in global markets and with the beginning of the crisis due to the COVID-19 pandemic.
The LatinFinance award was the outcome of a highly competitive process that includes various factors which influence the success of an operation, focusing on the Latin American capital market.