Colombia Bond Yields Fall Most in Three Months on Economic Growth, Peso

Colombia’s peso bonds rose, pushing yields down the most in three months, as higher economic growth forecasts and speculation the local currency will strengthen further boosted appetite for the securities.

The yield on Colombia’s benchmark 11 percent bonds due July 2020 fell 15 basis points, or 0.15 percentage point, to 7.56 percent at 3:23 p.m. New York time, according to Colombia’s stock exchange. That’s the biggest drop since April 30. The bond’s price jumped 1.143 centavos to 123.525 centavos per peso.

“Colombia is doing well, the economy is growing, inflation is under control and now that there is less concern the central bank will intervene, people continue to see the bonds as an attractive investment,” said Guillermo Puentes, head trader at Banco de Comercio Exterior de Colombia SA, known as Bancoldex.

Central bank chief Jose Dario Uribe said after the July 23 monetary policy meeting that the bank raised this year’s economic growth forecast by 1.5 percentage point to a range of 3.5 percent to 5.5 percent. He also said that Banco de la Republica “has never ruled out intervening in the market again.” The bank purchased $20 million a day between March 3 and June 30 to curb a rally policy makers said left the peso “misaligned.”

The peso advanced 0.3 percent to 1,844.51 per U.S. dollar, from 1,849.9 yesterday. The peso is up 10.8 percent this year, the best performance among world currencies tracked by Bloomberg.

TES Auction

Colombia’s borrowing costs rose at a government debt auction today of fixed-rated securities, known as TES.

The yield on the July 2024 bonds rose to 7.85 percent from 7.84 percent at the last auction on July 14, the Finance Ministry said in a statement. The yield on the June 2016 bonds increased to 7.22 percent from 7.13 percent at the previous auction.

Demand for today’s auction was 1.37 trillion pesos ($743 million), about three times the 450 billion pesos offered.

Colombia will name German Arce public credit director after President-elect Juan Manuel Santos takes office Aug. 7.

Arce, an economist who is vice president of marketing and treasury at HSBC Colombia, said in a phone interview today he accepted the post offered by designated Finance Minister Juan Carlos Echeverry. He said he won’t be officially named until the new government takes office.

To contact the reporter on this story: Andrea Jaramillo in Bogota at ajaramillo1@bloomberg.net

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