| NEW YORK, July 14
NEW YORK, July 14 Wall Street on Monday
welcomed Peru's new finance minister as a "market friendly"
choice, viewing him as likely to prolong policies which have
fueled some of the strongest economic growth in Latin America.
On international markets, Peruvian bonds rose Monday after
news Luis Valdivieso, a veteran of the International Monetary
Fund, would succeed Luis Carranza, the departing finance
minister who is credited for much of Peru's economic boom.
President Alan Garcia was due to swear in Valdivieso at
noon (1700 GMT) Monday, presidential aides said.
Little change was expected in Peru's economic policy under
Valdivieso, an economist who has worked for nearly three
decades at the IMF.
"Valdivieso is widely expected to maintain a
market-friendly set of economic policies; his official
appointment should be market-neutral in our view," wrote Credit
Suisse analyst Carola Sandy.
Cabinet aides said earlier this month Carranza was talking
of leaving, apparently to return to the private sector where he
had worked for banks.
Under Carranza, Peru posted economic growth of 9 percent in
2007, its highest in more than a decade. Recent data shows the
economy growing by as much as 13 percent, while the annual
inflation rate is below that of other big South American
The outgoing minister's vision was to spur enough growth
to quadruple the size of Peru's economy within two decades.
"Peru is a success story that goes beyond high commodity
prices," said Alberto Bernal, head of emerging markets fixed
income research at Bulltick Capital Markets in Miami.
"According to the World Bank, Peru is, with Panama, the
country that has increased total factor productivity the most
since 2001." he said. "Good policies are behind this. Carranza
will be missed, yet Valdivieso is a good option for
In international markets, Peru's dollar-denominated global
bonds advanced on Monday.
Its global bond due in 2037 PERUGLB27=RR, regarded as the
country's most traded dollar-denominated bond, rose 0.500 point
to bid 100.500, offering a yield of 6.51 percent.
Peruvian bond yield spreads over U.S. Treasuries narrowed
by 7 basis points to 199 bps, according to JP Morgan's Emerging
Market Bond Index 11EMJ. Narrower yield spreads are seen as
reflecting less investor risk.
While Wall Street executives expressed positive views on
Valdivieso, some Peruvian labor leaders said they did not like
him as a choice since he would likely continue the policies of
Carranza, who they say did not do enough to reduce Peru's
While Valdivieso's appointment pleases Wall Street, "his
naming will give unions, some of which went on strike last
week, more rhetorical fire power to target the administration's
economic policies," said Enrique Alvarez, IDEAglobal's head of
research for Latin America.
"His prior IMF background, while seen as a plus for Wall
Street, can be pointed to by the unions as a deaf response from
the government to workers' clamor for policies to narrow the
gap in wealth distribution," he continued.
Valdivieso helped design Peru's economic stabilization
program of the early 1990s when then-President Alberto Fujimori
For more on Valdivieso, click on FACTBOX [ID:nN13373578].
(Editing by Kenneth Barry)