In August, international investors increased their holdings of Peru Soberanos by PEN2.8bn to PEN61.4bn (the second monthly increase in a row). Foreign holdings stood at 48.1% of the total vs. 45.9% in the previous month. Foreigners were active buyers of Soberanos 28s to 40s, with the 31s seeing the greatest demand, and they were sellers of bonds at the front end of the curve, mainly Soberanos 24s. This was reflected in the performance of the curve: front-end bonds up to Soberanos 29s underperformed the rest of the curve, which flattened, and belly and long bonds had an average yield compression of about 40bp. In a month when the stock of Soberanos did not increase, international investors were the main buyers. For the last two months, foreign investors have seemed a bit complacent, adding Soberanos positions and shrugging off some of the political uncertainty surrounding the new government. In the short term, central bank appointments and approval of the fiscal budget could create some noise, while at the same time investors are waiting for more clarity on investments and other policies. These uncertainties add to the risk premia of Peruvian bonds.