Evolution of Bank and Non-Bank Corporate Funding in Peru

Abstract

Bank lending remains the most important funding source for Peru’s non-bank private sector. However, the corporate bond market is slowly emerging as an additional source of funds for domestic firms. As in other emerging market economies, Peruvian domestic non-financial corporations have been issuing bonds in the international capital markets,4 partly replacing domestic market bond issuances. Offshore issuance is cheaper, owing to quantitative easing in the developed world, and can also be attractive in terms of market efficiency, liquidity and economies of scale, in contrast to the less liquid local market. Although certain non-bank financial entities such as domestic pension funds are in a position to encourage the development of the domestic capital market, these entities are mainly oriented to the international markets.

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