REFILE-Peru eyes Euroclear set-up by end of Q2

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NASSAU, April 7 (IFR) - Peru aims to complete discussions with Euroclear by the end of the second quarter to ease foreign investor access to the local bond market, a debt official told IFR on Thursday.

The move would likely increase the share of local bonds held by foreigners from around 33% currently, though the government is committed to taking a gradual approach to opening up its US$14bn-equivalent Soberanos market.

“We are getting more interest in Soberanos from foreign investors,” Carlos Blanco, Peru’s director general for public credit, told IFR on the sidelines of the annual IDB meeting.

“Our intention would be to have that ready before the new administration comes in, so that they have all the available elements and tools to make this market more liquid,” he said.

International investors can already participate in Peru’s local sovereign bond market, but only through local brokerages. They also must satisfy registration requirements that allow the government to retain information on who owns the bonds.

“That doesn’t make it very easy for investors, who normally are used to buying and selling right away. Our process is a bit longer than it normally would be,” said Blanco.

“We are going to move slowly but surely towards an open market.”

In an effort to make the transition as gradual as possible, Peru could offer investors in some of its existing Soberanos to exchange their holdings for newly issued Euroclearable notes.

“If we were to inaugurate that platform, we could do that with a liability management exercise, and that exercise would be Euroclearable,” said Blanco. (Reporting by Davide Scigliuzzo; Editing by Marc Carnegie)