Foreign investors once again added Soberanos positions in May. Offshore holdings stood at 39.6% of the total issued versus 39% in April. The share increased despite the larger issuance, which implies international investors have been bigger buyers at the margin. In notional terms, the amount of Soberanos outstanding increased by about PEN3.7bn in May, and international investors bought c.PEN 2.2bn, or about 59% of the net new issuance. Foreigners added the most positions in Soberanos 31s (PEN1.1bn), Soberanos 29s (PEN 446.7mn) and Soberanos 34s (PEN 229.8mn). In terms of performance, the Soberanos curve experienced a c. 45bp yield compression and was in the middle of the pack, outperforming Mexico and Chile but underperforming Colombia and Brazil. The new Soberanos 2033s issued under the “Sustainability” umbrella in early June also seems to have attracted international investors and we thus believe their holdings are likely to continue to increase. With inflation trading lower and economic growth facing some headwinds, the Central Bank has some room to start cutting rates down the road. We believe that the belly of the Soberanos curve remains attractive and that it is the area of the curve where international investors have been adding positions.