1. The Peruvian fixed income market

2. The Peruvian securities market  At the end of 2010, the valuation of the holdings registered with CAVALI was US$ 85,865.57 million  On this date, the fixed income market was valued at US$ 19,277.73 million  The number of recorded issues up to December 2010 came to 1,258  57% of the issues were fixed income securities

3. Market Features  Corporate Bonds  Mortgage Bonds  Government Bonds  Junior Bonds  Leasing Bonds  Asset Backed Securities  Commercial paper  Pension Reform Bonds Instruments : 100% Book-entry Mechanisms  Centralized trade mechanism  Regulated  Corporate Bonds  Stock market agents  Wanted: Institutional Investors  Centralized system for trading Govt Bonds  Not regulated. Appointed by MEF within the Market Designers program  Govt Bonds  Institutional Investors: banks and AFP can access the system directly  Wanted: Institutional Investors

4. CAVALI’s Role  It has 100% of the fixed income market  It processes close to 3,873 fixed income transactions per year  Fixed income represents 43.8% of the total amount settled within CAVALI  Private fixed income: BVL  Govt fixed income: Datatec Settlement with CAVALI

5. Valuation of trends in CAVALI Valuation by investor type During 2010  Resident investor holdings reached US$ 14,956 million, while those of no residents reached US$ 4,322

6. Future Developments Relatively small market  Primarily focused on institutional investors  Transaction fees linked to the issue which can only be absorbed by large corporations  Excessive liquidity in the market: few instruments in which to invest What to do?  Revise the regulations for the issue of fixed income securities (reduction of fees and paperwork)  CAVALI has been working closely with the Ministry of Economics and Finance in order to develop the market.

7. Magaly Martínez Senior Legal Manager mmarti@cavali.com.pe