Category: Peru

Ratings agency Moody’s Investors Service has improved is outlook on Peru’s Ba3 foreign-currency government bonds to positive from stable. The action was taken to reflect significant reductions in Peru’s external vulnerabilities, said the Agency. Moody’s highlighted the declining trend in the country’s external debt ratios and the fiscal restraint being applied by President Alan García’s new administration. However, the Agency also noted that although the government has taken steps to increase local-currency funding in the domestic market, “a latent credit vulnerability remains given the presence of a relatively high share of foreign currency denominated debt”.

Peru’s annual inflation slowed in October to 1.89%, from 2% in September, helped down by the decline in international oil prices. On a monthly basis, prices were up by 0.04%, versus 0.03% in September. The Bank is targeting annual inflation this year of between 1.5% and 3.5%. The Bank was expected to hold the benchmark interest rate steady at 4.5% at its meeting Thursday evening.

Telefonica del Peru, a subsidiary of Spain’s Telefonica, reported a 39.2 percent increase in profits in the third quarter to $36.2 million. The company, which controls the fixed line market and competes principally with America Movil in the mobile phone market, said the increase was a result of the purchase of a competitor, Telefonica Empresas Peru.

Peru’s GDP expanded by 9.2% in August, year on year, the second highest monthly growth this year according to the institute of national statistics and data (INEI). Construction showed the strongest climb during the month, up by 21.4%, followed by the agri-fisheries sector, which expanded by 11.6%. August’s growth figures were up from July, when the economy expanded by 9.04% and took the increase for the eight months through August to 7.25%. Annual expansion was 7.29%. Last year, Peru recorded growth of 6.5%; the target for economic expansion this year is 6.6%.

Valentín Paniagua, former interim president of Peru, died Monday in Lima following heart problems. He had been in hospital since August. Paniagua, who was 70, ran for president in Peru’s April elections, finishing in fifth place. He served as interim president from November 2000 until July 2001 after the collapse of the government under President Alberto Fujimori.

Peru is to sign a new standby agreement with the International Monetary Fund (IMF) before the end of the year. The credit line will help the country protect itself against future drops in commodity prices, the government said. The last agreement with the Multilateral expired in July. The announcement follows President Alan García’s whirlwind tour of Washington earlier this week, which began with the first meeting so far between the “Comeback Kid” and President George W. Bush. The last time Alan García was in Washington as head of state, George Bush senior was in the White House. García also spent time in high-level talks with the IMF, the World Bank, and the Inter-American Development Bank (IDB). Peru is keen to push forward US ratification of the free-trade agreement between the two countries and the US is hoping to enlist Peru’s support in the war on drugs.

Peru’s banking superintendency has given the nod to UK and Hong Kong-based financial giant HSBC to set up operations in the local market. The Bank will operate under the name HSBC Bank Peru and is due to start operations on October 9. HSBC applied in March to the superintendency as part of a strategy to expand in the region. The Bank, the third-largest in the world, also heard from Colombia’s financial regulator this week that it could open a representative office in that country. HSBC already operates in Argentina, Brazil and Mexico. Earlier this year it agreed to buy the assets of Lloyds TSB in Paraguay for $15 million.

Peru recorded inflation of 0.03% in September, lower than the 0.14% seen in August – according to the national institute of statistics (INEI). Inflation for the nine months through September was 1.35% and for the 12 months through September rose to 1.99%. The slowdown in prices was led by a drop in fuel prices cutting transport costs. Telephone tariffs also dropped.

Peru’s private investment promotion agency ProInversion has sold around 41 million shares, representing 39.95% of the share capital, in Empresa Eléctrica de Piura, an electricity company controlled by Endesa of Spain. The sale raised almost $15 million.

Peru Monday launched the tender of copper mine Michiquillay. The government, via private investment promotion agency ProInversión, is looking for investment of between $300 million and $700 million. Michiquillay, located in Cajamarca, close to South America’s largest gold mine Yanacocha, has reserves of copper, gold and silver estimated at 544 million metric tonnes. Those expected to participate in the tender process include Southern Copper Corp and Compañía de Minas Antamina. The results of the tender are due to be announced in mid-December.