Thursday, March 26, 2009

Peru's $ denominated bonds off to a good start

Peru's plan to raise money in the wake of the recent stock market rally has worked. International investors bought $1 billion worth of the new bonds yesterday (Wednesday, March 26), registering five times higher demand than than supply according to Peru's Minister of Economy and Finance, Luis Carranza.

Although I feel this sense of international confidence in unjustified, considering the true state of Peru's economy. It was still a very wise idea for Peru to raise money when it did.

As I expressed in this previous post, Peru will eventually have to face facts now that commodity revenues have declined thanks to falling prices.

Raising money when it did (before their debt rating is cut) was therefore a great idea. Whether international demand for the bonds was justified or not is not really important, surviving and raising money during these tumultuous times are what matters and it seems Peru is doing well at just that.

If you'd like to read more about this development check out this article from Andina News.