Colombian Yields Near Three-Month High on Interest-Rate Outlook

Colombia’s peso bonds fell, pushing yields on benchmark securities near a three-month high, as speculation the central bank will raise interest rates this week sapped demand.

The yield on the nation’s 9.25 percent bonds due in May 2014 rose five basis points, or 0.05 percentage point, to 6.31 percent, according to the central bank. The yield rose to 6.33 percent on Feb. 13, the highest on a closing basis since Nov. 23. The bond’s price fell 0.128 centavo to 105.881 today.

Colombia’s central bank will raise its overnight lending rate a quarter percentage point to 5.25 percent on Feb. 24, according to 11 of 19 economists surveyed by Bloomberg. Eight analysts estimate the rate will remain unchanged at 5 percent.

“Yields in the short end of the curve will continue to see pressure this week ahead of the central bank’s meeting,” said Felipe Campos, head analyst at Alianza Valores brokerage in Bogota.

The yield on the peso bonds due May 2014 has risen 26 basis points since Banco de la Republica unexpectedly raised the key rate a quarter percentage point in its Jan. 30 meeting.

The Colombian peso gained after China’s central bank cut reserve requirements for lenders and on speculation European finance ministers will settle their remaining differences over a Greek bailout.

The peso climbed 0.1 percent to 1,773.60 per U.S. dollar, according to the stock exchange’s foreign-exchange electronic transactions system, known as SET-FX. With markets closed in the U.S., Colombia’s currency trades in the so-called next-day market, in which payment and delivery are made the following trading day.

Euro-area finance ministers are meeting in Brussels to seek agreement on a 130 billion-euro ($170 million) Greek bailout. Talks on Greece’s second aid package in two years will aim to reconcile demands made on Greek politicians, a debt swap among private creditors and the role of the European Central Bank.

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

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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