In April, foreign holdings of Peru Soberanos declined by about PEN1.2bn to 46.6% of the total from 47.8% in March. Foreign investors sold positions from Soberanos 26s to 37s, with 29s experiencing the largest outflow (PEN672.4mn). The 34s were the only bond where foreigners added positions (PEN94.6mn). During the month, international investors were the main sellers and pension funds the main buyers. April was characterised by risk-off sentiment in the market; in this context, LatAm currencies and rates retreated. The PEN performed more or less in line with its LatAm peers (down c.4.0%) but the Soberanos curve underperformed other local bond curves. Alongside the recent S&P downgrade, investors have also been concerned about withdrawals from pension funds in Peru that were approved at the beginning of May and the ongoing political noise. So far in May, Soberanos yields seem to have stabilised. On May 12, the central bank hiked the key rate by 50bp, signalling further hikes as inflation remains above the target rate.