Peru
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Miners had been out of favour but are bouncing back as commodity prices rise -
Signs of moderation from president not enough to ease S&P and Fitch’s fears over weaker metrics
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Investors say dollar bonds yet to fully price in uncertainty
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Peruvian generation company to repurchase $145m of 2027s
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As sustainability-linked bond issuance gains momentum in emerging markets, questions are being asked about the product and its potential for innovation. The next iteration could see a feature already accepted in the loan market but not yet in bonds: a margin step-down.
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Peru-headquartered San Miguel Industrias, known as SMI Group, which produces plastic packaging across Latin America, sold a sustainability-linked bond on Monday. The trade is the latest in a long string of Latin American issuers embracing the innovative format.
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Mining firm Compañía de Minas Buenaventura sent a strong message about Peruvian companies’ access to capital markets on Tuesday, pricing its debut bond issue through guidance the day after Pedro Castillo — a leftist teacher who has pledged to hike taxes on miners and redraft the country’s constitution — was confirmed as Peru’s next president.
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SMI Group, which makes plastic packaging in nine Latin American countries, began investor calls on Tuesday ahead of a proposed sustainability-linked bond.
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Peru published its sustainable bond framework on Friday, after the finance ministry issued a resolution approving the document and therefore paving the way for the incoming government to issue what would be the country’s first sovereign ESG bond.
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Continued strong inflows into emerging markets debt funds are encouraging riskier Latin American companies to turn to debt markets for funding — even as political risks weigh heavily on the outlook for certain credits. While some buyers think they are picking up rare bargains, others are concerned that they’re becoming overexposed to the region.
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Compañía de Minas Buenaventura will provide a stern test of appetite for Peruvian risk under new leftist president Pedro Castillo this week as it seeks an inaugural bond issue that it will use to repay a tax liability.
