How much will the Peruvian government spend on servicing its current debt outstanding for the given bond in 2025 according to this chart captured in 2019? 3,000 million Peruvian sol 6,000 million Peruvian sol 4,000 million Peruvian sol 10,000 million Peruvian sol Track Annotate Zoom 12000 PERU 5 % 11/18/50 $1 129.164 +.341 129.009 / 129.324 4.000 /3.985 At 15:49 –x– Source CBBT PERU 5 11/18/5_View All Maturities Export Settings Debt Distribution Maturity Profile Summary Statistics History Show As 9) Table Curr PEN (MLN) Breakdown By Debt Type Add Comparisons and Settings . Plot Lines Peruvian Government International Bond Peruvian Government Interna 6) Edit Bond Principal 7) Edit Interest Display Settings Consolidate Curr Issr & Subs Payments Prin & Int. Display To Maturity Date Range 04/2019 Frequency Yearly 8000 Debt Type Filters Asset Classes Corp Loans Muni Coupon Type All Security Type All Bond Type Maturity Type Currency of Issue Country of Issue 100001 Peruvian Government International Bond Amt Out (Million), All All Expiration Date Total Debt 124,239 Total Issues WtAvg Fixed Cpn 6.07 WtAvg My 01/28/2034 WIAvg Yrs 14.81
The correct answer and explanation is:
Based on the information provided from the bond data, the Peruvian government is expected to spend the following amounts on servicing its current debt outstanding in 2025 for the specific bond mentioned:
- The bond in question is a Peru 5% 11/18/50 bond.
- The nominal amount outstanding appears to be $3,000 million, $6,000 million, $4,000 million, or $10,000 million in Peruvian Sol (PEN). This value may represent different tranches or portions of debt issued at various times.
Step-by-step breakdown:
- Bond Characteristics:
- The coupon rate for the Peru 5% bond is 5%, meaning that the government pays 5% interest annually on the outstanding amount of the bond.
- The maturity date is November 18, 2050, so the bond will pay interest until that time.
- Servicing the Debt in 2025:
- In 2025, the government will need to pay interest to bondholders on the total outstanding amount of this bond.
- Assuming the total outstanding amount is $10,000 million PEN (this seems the largest value, suggesting it could be the total amount referenced for this bond in the chart), the annual interest payment is calculated as: Interest Payment=5%×10,000 million PEN=500 million PEN\text{Interest Payment} = 5\% \times 10,000 \text{ million PEN} = 500 \text{ million PEN}
- Therefore, the government will spend 500 million PEN on servicing the interest of this bond in 2025.
- Considerations:
- The principal payments will not occur until maturity in 2050, so only interest payments are relevant in 2025.
- If the total outstanding amount was different (e.g., $6,000 million PEN or $3,000 million PEN), the corresponding interest payments would be: 5%×6,000 million PEN=300 million PEN5\% \times 6,000 \text{ million PEN} = 300 \text{ million PEN} 5%×3,000 million PEN=150 million PEN5\% \times 3,000 \text{ million PEN} = 150 \text{ million PEN}
- Conclusion: The Peruvian government will need to allocate 500 million PEN annually to cover the interest on this bond in 2025, assuming the total debt is 10,000 million PEN.
This explanation is based on the data extracted and assumes the interest rate and bond details provided remain constant for the debt servicing in 2025.