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Capital markets: Peru’s no-cost political risk

Three presidents in a month isn’t enough to deter buyers of the country’s century bond.


It is hard to pinpoint what was most impressive about Peru’s $4 billion bond sale at the end of November.

Was it that it included a $1 billion tranche of 100 year notes – meaning the country joins the international DCM Century club? Was it the fact that despite the size of the combined three tranches it priced at historically low yields?

Or was it that this pricing was achieved despite the country being hard hit in both fiscal and health terms by the coronavirus?

Century bonds in Latin America have something of a chequered history

For many it was the fact that the bondholders shrugged off the country’s political risk – Peru had three presidents in November and the sale came shortly after country-wide protests about the impeachment of Martín Vizcarra.

This also led to the resignation of the country’s finance minister María Antonieta. Vizcarra’s successor, Manuel Merino, lasted less than a week before resigning in the face of those protests, and former World Bank official Francisco Sagasti took over the helm.

Century bonds in Latin America have something of a chequered history.

Most notably Argentina’s – issued in 2017 – has just been restructured, Petrobras’ $2.5

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