Peru prioritizes diversification in euro trade

martes 23 de febrero de 2016 18:02 GYT
 

By Paul Kilby

NEW YORK, Feb 23 (IFR) - Peru tapped new pockets of demand through a 1bn 14-year bond on Tuesday which, though expensive, established a presence for the sovereign in a market it had visited just four months earlier.

The Andean nation's Euro deal on Tuesday was part of a strategy to diversify its investor base and not merely focused on getting the best possible price, said bankers.

"Peru sees it as an investment," said a banker on the trade. "They could have issued in dollars and swapped back to euros but they wouldn't have got their investor diversification."

Costs versus dollars were seen as high, however.

Peru's final spread of mid-swaps plus 295bp - the equivalent of about dollar Libor plus 387.5bp - was over 100bp wide to the 250bp fair value spread on a new 14-year dollar bond, said a syndicate manager away from the trade.

"No matter how you look at it, it is pretty wide to the dollar curve," he said.

That may have mattered little to Peru, which like other sovereigns is less sensitive to such comparisons given they often keep proceeds in the original currency.

Still new issue concessions for some were closer to 30bp after using tighter pre-announcement levels on existing euro denominated 2026s of 225bp-230bp for the A3/BBB+/BBB+ rated sovereign.   Continuación...