After years of political unrest in Peru, the relative calm of recent months has made international investors increasing their appetite for the country's sovereign bonds.
Some of the Peruvian economy's standout characteristics are its low debt-to-GDP ratio, which is among the lowest within its Latin American peers, and its stable currency, the Sol.The Central Reserve Bank of Peru also lowered interest rates at its September meeting to 5.25%, the lowest level across Latin America. Peru also holds the steepest yield curve across global and emerging markets, Dhawan highlighted — a stark contrast to the inverted yield curves in the U.S. and many other countries.
"In some sense, the lack of a strong executive has led to better fixed income outcomes," Austerweil added. "Whilst the commodity bonus has helped Peru in the short-term, it is hard to see a good longer-term equity story without a proper functioning political system," Dhawan said.