International investors continue to reduce their holdings of Peruvian Soberanos steadily, and while the amounts are small, it shows a reluctance to add positions, something that has happened for the last four consecutive months. In November, foreigner holdings of Peru Soberanos stood at 42.3% of the total versus 42.8% in the previous month. In nominal terms, this represented a decrease of c.PEN198mn. Noticeably, there was some repositioning along the curve, with foreigners adding positions in Soberanos 34s and 29s and reducing the most positions on 31s, followed by 37s and 40s. For the month, banks and pension funds were the main buyers and international investors the main sellers. The Soberanos curve had a relatively good performance: bond yields decreased by about 68bp on average, and the PEN was the second-best performer in LatAm FX (+3.3%). However, so far the good performance has not made Soberanos more appealing for international investors, who may be more concerned about Peru’s political uncertainties. At its last meeting, the central bank hiked the key rate by 25bp to 7.50%, leaving the door open for another hike. There are reasons to be cautiously optimistic regarding political developments and their effects on markets, but caution is warranted in the near term while the new president Dina Boluarte manages the crisis and until some of the social unrest dissipates, with the risk of early elections likely to weigh on Soberanos.