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The Peruvian fixed income market

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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

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Market Features Corporate Bonds Mortgage Bonds Government Bonds Junior Bonds Leasing Bonds Asset Backed Securities Commercial paper Pension Reform Bonds Instruments : 100% Book-entry Mechanisms Centralized trade mechanism Regulated Corporate Bonds Stock market agents Wanted: Institutional Investors 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

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CAVALIs Role 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 Settlement with CAVALI

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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

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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.

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Magaly Martnez Senior Legal Manager mmarti@cavali.com.pe