In February, international holdings of Peru Soberanos stood at 49.6% of the total – a small increase from the 49.3% recorded in January. In nominal terms the increase accounted for about PEN711mn. Foreign investors continued extending duration by adding Soberanos 37s, which represented the largest position change (PEN593mn) followed by 32s, while they reduced some positions in Soberanos 28s and 31s. During the month, the Soberanos curve outperformed other local LatAm curves even as the average yield along the curve increased by about 8bp. International investors and insurance companies were the main buyers and banks the main sellers. In line with market expectations, at the last couple of policy meetings the BRCP hiked the key reference rate by 50bp, which has driven the flattening of the curve with some front-dated bonds underperforming. Inflation remains a concern and the window remains open for further rate hikes.