Petroperú bonds maintain international trend

With regards to the article published today in the Gestión newspaper, titled "Petroperú bonds would be depreciating due to non-payments to Talara Refinery contractors", we indicate the following:

1. The price of debt instruments issued in dollars in emerging markets, including Petroperú bonds, have been affected mainly by market forces, such as the increase in the reference interest rate of the United States Federal Reserve (FED) and the greater aversion to risk in investors caused by the war between Russia and Ukraine, among other factors. These facts have had an impact on the value of financial assets, such as sovereign bonds, corporate bonds, subordinated bonds and shares. As usual in international financial markets, when the FED raises the interest rate, the value of the bonds falls and there is additional pressure on the exchange rate.

2. The following graphs show how the upward trend in interest rates has impacted the behavior of the bonds of the main oil companies in the region, such as Pemex, Ecopetrol, Enap and Petroperú. With this, it can be corroborated that, despite the differences in oil production capacity, terms and particular conditions (coupons, country risk, sovereign rating, among others), the behavior of its bonds has followed the same trend:

Graph 1: Price of Petroperú and LATAM oil companies’ bonds

Source: Bloomberg 06/10/2022.

Graph 2: Federal Reserve Rate

Source: Bloomberg 06/10/2022.

3. In this sense, the FED, after having kept the interest rate at range levels of 0.00% - 0.25% since March 2020, has made strong adjustments, thus placing itself in a target range of 3.00% - 3.25% to date; however, the market anticipates additional increases in 2022 and 2023, in order to contain the current inflationary process.

4. As explained, the behavior of the price of Petroperú bonds is not related to what is stated in the headline of the aforementioned note.