Peruvian bonds are emerging as an outstanding investment alternative for 2025

According to a recent report by Renta4 SABPeru’s sovereign bonds have solid fundamentals that make them an outstanding opportunity for investors in 2025. The firm recommends “buying” Peruvian bonds due to their favorable economic prospects and attractive financial indicators.

Apartments in high-income districts reduced their prices by 2% in the first nine months of the year, while in middle-income areas the values remained stable, according to BCR data.

Reasons behind the recommendation

Renta4 SAB highlights that Peru is positioned as the country with the lowest projected inflation rate in Latin America, which is expected to remain between 2.4% and 2.5%, within the target range of the Central Reserve Bank of Peru. This contrasts with a regional average inflation estimated at 4%.

Additionally, the Peruvian economy is projected to grow between 2.8% and 3%, leading economic growth in the region, which is estimated at 2.6% on average. This advance will be driven by a 3.5% increase in private investment and a 3% increase in private consumption.

The exchange rate also stands out as a positive factor. Renta4 SAB estimates that the Peruvian sol will maintain its stability, with an expected range of 3.74 to 3.8 soles per dollar, consolidating it as the currency with the least volatility in Latin America in the last two decades. This performance is attributed to the favorable outlook for the currency, highlighted by the Central Reserve Bank (BCR) in its latest inflation report.

Competitive advantages

Peruvian sovereign bonds offer real interest rates around 4%, significantly higher than those of their peers in the region, such as Chile, where real rates are around 1%. Furthermore, Peru’s low level of public leverage, with public debt equivalent to 33% of GDP, positions it as one of the most financially solid countries in Latin America.

Another relevant factor is the behavior of metal prices, especially copper, which represents approximately 35% of Peruvian exports. The high prices expected for this metal in 2025 further support Renta4 SAB’s recommendation.

Recommended bonuses

Renta4 SAB identifies the bonds SB12AGO31, SB12AGO32, SB12AGO33 and SB12AGO34 as the most attractive options within the Peruvian market. According to their estimates, these instruments have room for yield compression that would benefit investors. For example, the yield on SB31 could decrease from 5.95% to 5.51%, while SB34 could go from 6.74% to 5.86% during the first quarter of 2025.

It should be noted that this is positive for investors if the inverse relationship between profitability and bond price is taken into account. The reduction in the profitability estimated by Renta4 implies that the price paid for the investments would rise, which would provide them with profits.

The recommendation also considers expectations of interest rate cuts by the United States Federal Reserve (FED). A lower interest rate environment in the US could generate greater demand for emerging market bonds, such as those from Peru, increasing their attractiveness.

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