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The Peruvian fixed income market

The Peruvian fixed income market. The Peruvian securities market. At the end of 2010, the valuation of the holdings registered with CAVALI was US$ 85,865.57 million On this date, the fixed income market was valued at US$ 19,277.73 million

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The Peruvian fixed income market

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  1. The Peruvian fixed income market

  2. The Peruvian securities market • At the end of 2010, the valuation of the holdings registered with CAVALI was US$ 85,865.57 million • On this date, the fixed income market was valued at US$ 19,277.73 million • The number of recorded issues up to December 2010 came to 1,258 • 57% of the issues were fixed income securities

  3. Market Features Instruments : 100% Book-entry • Corporate Bonds • Mortgage Bonds • Government Bonds • Junior Bonds • Leasing Bonds • Asset Backed Securities • Commercial paper • Pension Reform Bonds Mechanisms • Centralized system for trading Govt Bonds • Not regulated. Appointed by MEF within the Market Designers program • Govt Bonds • Institutional Investors: banks and AFP can access the system directly • Wanted: Institutional Investors • Centralized trade mechanism • Regulated • Corporate Bonds • Stock market agents • Wanted: Institutional Investors

  4. CAVALI’s Role Settlement with CAVALI • It has 100% of the fixed income market • It processes close to 3,873 fixed income transactions per year • Fixed income represents 43.8% of the total amount settled within CAVALI • Private fixed income: BVL • Govt fixed income: Datatec

  5. Valuation of trends in CAVALI Valuation by investor type • During 2010 • Resident investor holdings reached US$ 14,956 million, while those of no residents reached US$ 4,322

  6. Future Developments Relatively small market • Primarily focused on institutional investors • Transaction fees linked to the issue which can only be absorbed by large corporations • Excessive liquidity in the market: few instruments in which to invest What to do? • Revise the regulations for the issue of fixed income securities (reduction of fees and paperwork) • CAVALI has been working closely with the Ministry of Economics and Finance in order to develop the market.

  7. Magaly Martínez Senior Legal Manager mmarti@cavali.com.pe

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