Peru: Paris Club deal almost struck
Big stride taken towards gaining investment-grade status
|Kuczynski: pays debts|
Peru's economy minister, Pedro Pablo Kuczynski, has a lot to be pleased about. Not only has his fiscal prudence made Peru a far less risky credit, he now has a debt pre-repayment deal with the Paris Club under his belt. Well, almost. The club of 19 permanent creditor nations, which includes France, Japan and the UK, has given Peru until August 15 to pre-repay $1.55 billion in debt, a strategy Peru hopes will help it avoid a looming build-up of payments this year. In mid-July, Peru issued a $750 million 20-year bond, having already issued the equivalent of $462 million in 12-year paper on the local market. Kuczynski says the remaining $338 million will come from government coffers, although he has left open the possibility of issuing more debt at home or abroad. "The circumstances in international markets are very favourable for Peru to make this operation," Kuczynski says. "We'll pay the most expensive Paris Club debt and finance these prepayments with debt at much longer maturities."
The pre-repayment deal comes just in time and follows similar agreements made with the Paris Club by Poland and Russia.