October 31, 2014 / 6:00 PM / 5 years ago

UPDATE 2-Peru says most of $3 bln in bonds sold to manage existing debt

(Adds context, details, byline)

By Marco Aquino

LIMA, Oct 31 (Reuters) - Peru’s sale of about $3 billion in government bonds this week, the country’s first tapping of global markets in more than two years, was aimed mainly at managing existing debt, Finance Minister Alonso Segura said on Friday.

The South American nation on Thursday sold 7.41 billion soles ($2.54 billion) in 10-year bonds, and $500 million in a reopened dollar-denominated global bond. The government described the total amount, 8.86 billion soles ($3.04 billion), as Peru’s biggest bond operation ever.

“More than 80 percent of the operation was really to manage our debt,” Segura told reporters at an event on Friday. When asked if Peru might issue additional bonds, Segura said: “the financing needs of Peru are very low.”

Before Peru launched its bond offers, the government had approved up to $1.12 billion in domestic and global debt issuance, which could be denominated in dollars or soles, and $4 billion worth of bond swaps or buy backs.

The bonds will help prefinance the 2015 budget, extend the average maturity of existing debt and boost borrowing in the local sol currency, Segura said.

“It was a very successful operation,” Segura said. “We’re continuing to de-dollarize our debt, which is a strategy we’ve been implementing for some time,” he said.

Peru has reduced its reliance on debt denominated in foreign currencies - mainly dollars - to 44 percent last year from 85 percent in 2004, according to the central bank.

All of the 10-year bonds Peru sold on Thursday, which carried a 5.7 percent annual coupon, were denominated in soles, the government said.

It is unclear how much of Peru’s dollar-denominated debt might have been swapped for the sol-denominated bonds.

The Finance Ministry said that it will release more details on the bond operations later on Friday.

The sales come even as the sol has slipped to its weakest level in about five years ahead of an expected hike in interest rates in the U.S. next year.

The global minerals exporter last tapped global markets with a bond reissuance worth about $1.1 billion in January 2012. Since then, its economy has slowed sharply on shrinking mining activity and ebbing private investment.

Peru is on track to post an economic expansion of around 3 percent this year - down from the more than the 6 percent average annual rate it enjoyed over the past decade.

The government, which is now preparing a third stimulus package to stimulate growth, has said it foresees a balanced fiscal balance this year and a deficit equal to 0.4 percent of gross domestic product in 2015. (Reporting By Marco Aquino, Additional Reporting by Teresa Cespedes, Writing by Mitra Taj; Editing by Meredith Mazzilli and Alan Crosby)

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