Demand soars for bond issue by Peru’s Luz del Sur

Peru power distributor Luz del Sur, which serves Lima, placed 360-day bonds for 100mn soles (US$27mn) with a yield of 5.4375%.

Demand for the series E bonds, which are part of the first issue of short-term instruments under the utility's fourth corporate bond program, was 180mn soles, the company said in a securities filing.

Series D bonds placed by China Yangtze Power-controlled Luz in April raised 116mn soles, demand for which was 133mn soles.

The bond proceeds are primarily used to refinance bank loans and, if needed, to finance investments and/or working capital.

This month, Moody’s and Pacific Credit Rating (PCR) affirmed their respective 'AAA.pe' and 'peAAA' ratings for the bond program, both with stable outlooks.

Moody’s highlighted the company “as one of the only two distributors of electrical energy in the city of Lima, in a sector with regulated rates, which includes the indexation of rates in the event of inflation and exchange rate variations.”

PCR pointed to the distributor’s “long-term income stability, especially, in the segment of residential and commercial clients, ensuring its ability to supply demand by signing long-term contracts with electricity generating companies.”

Luz’s concession area covers 3,500km2, home to over 5mn residents, and it has 58 power supply contracts for a combined 1,309MW.

The distributor’s first quarter revenue rose 2% year-on-year to 1.16bn soles, while the bottom line slid 12% to 196mn soles due partly to higher financial expenses. Investment in 1Q24 totaled 81.3mn soles.

Its energy sales in the first three months of 2024 rose nearly 4% to 2,595GWh compared with January-March last year. Dispatch to free clients grew the highest, followed by commercial and industrial users.

Luz recently announced plans to procure electricity for supply to the regulated market. The power purchase agreements will run for 15 years, starting in 2028.

Luz del Sur sales by segment (Source: Luz del Sur)