Peru said on Monday an eager market had soaked up its offer of US$ 4 billion worth of debt, including a rare century bond, as the world´s No. 2 copper miner scrambles to raise funds to soften the economic fallout from the coronavirus crisis.
The U.S. dollar-denominated debt was offered in three tranches, Peru´s economy ministry said, headlined by the US$1 billion issuance of an 100-year bond. Standard & Poor’s has Peru’s credit rating at BBB+, while Moody’s rates it at A3.
The ultra-long bond was placed at a coupon rate of approximately 3.23%, José Olivares, director-general of the Public Treasury of Peru´s Economy ministry announced. The bond expires in 2121.
The issuance comes as Peru grapples with what is expected to be its worst economic contraction in a century and a political crisis that has seen it go through three presidents in less than a month.
“It was a very strong boost from the capital market and from global investors,” Olivares insisted. “We were pleasantly surprised by the demand, at the peak it was over $15 billion.”
Peru also placed US$ 1 billion of bonds maturing in 2032, with a coupon rate of 1.86%. It also issued US$ 2 billion worth of debt maturing in 2060, Olivares said.
Olivares said recent protests had weighed on appetite for Peru´s bonds and currency, but that markets had stabilized after Congress last week appointed interim president Francisco Sagasti, who has promised to hold general elections on April 11.
“The market trusts that the economy will continue to operate based on prudent fiscal policies,” he said.
Economy and Finance minister Waldo Mendoza told Congress on Monday the fiscal stimulus being carried out to cushion the blow of the pandemic, which is worth nearly 20% of Peru’s gross domestic product (GDP), would likely increase public debt from 28% of GDP to 35% by year’s end.