The spread between Peru and Chilean USD bonds has been trading down, and this pattern looks likely to continue. We expected Peruvian hard currency bonds to outperform Chilean bonds on the back of better economic performance, lower expected fiscal deficit, lower hard currency bond issuance, and while both countries are exposed to political noise, the new Chilean government may be under more pressure to deliver on some of its campaign pledges. In addition, the process of re-writing the constitution could add to the noise. In this context, we prefer Peruvian USD bonds at the front and belly of the curve over Chilean bonds with similar tenors.