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Colombian Bond Yields Post Biggest Weekly Jump in 15 Months on Debt Sales
The yield on Colombia’s benchmark bonds posted the biggest weekly increase in 15 months as inflation quickened and the government boosted debt sales.
The yield on the country’s 11 percent bonds due 2020 rose 36 basis points this week, the most since June 2009, to 7.43 percent, according to Colombia’s stock exchange. Yields climbed nine basis points, or 0.09 percentage point, at 4:44 p.m. New York time. The bond’s price fell 0.754 centavo to 124.316 centavos per peso today.
A Sept. 4 report showed Colombia’s annual inflation rate was 2.31 percent in August, above the 2.23 percent median estimate of 22 analysts surveyed by Bloomberg. Colombia raised its estimate for local bond sales next year by 2 trillion pesos ($1.1 billion), Finance Minister Juan Carlos Echeverry said Sept. 6. The increase will lead the central government deficit to rise to 4.1 percent of gross domestic product from a previous estimate of 3.9 percent.
“The announcement that the government would increase its deficit made people think, ‘more debt issues next year,’ so the market had a technical correction,” Jairo Viana, head of sales at Bogota-based brokerage Proyectar Valores SA, said today in a telephone interview.
Colombia’s peso rallied to its highest level in more than two years after Moody’s Investors Service raised the country’s credit rating outlook yesterday to positive from stable.
The currency climbed 0.3 percent today to 1,798.85 per dollar from 1,804.32 yesterday. The peso hasn’t closed beyond 1,800 since Aug. 6, 2008. Today’s gain extends the peso’s jump this year to 13.6 percent, the best performance among all currencies tracked by Bloomberg.
“Moody’s outlook upgrade for foreign currency deposit ratings of Colombian banks sent COP on a steep hike,” 4Cast Inc. said today in a note to clients. “The possible upgrade will likely increase foreign investment, supporting our view that the peso will continue to appreciate in medium term.”
Colombia will probably receive an investment-grade credit rating next year, Felipe Hernandez, an economist at Banco Santander SA in Bogota, said today in a note to clients.
To contact the reporter on this story: Nathan Gill in Quito at ngill4@bloomberg.net
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