Colombian Peso Bond Yields Fall Toward Record as Growth Slows

Colombia’s peso bonds rose, pushing yields toward a record low, on speculation slowing economic growth will keep inflation near the central bank’s target.

The yield on the government’s 10 percent peso-denominated debt due in July 2024 dropped one basis point, or 0.01 percentage point, to 6.54 percent, according to the central bank. It fell to 6.50 percent on Sept. 13, the lowest closing level since the securities were first issued in 2009.

“People aren’t very optimist on growth,” said Juan Camilo Santana, an analyst at Cia. de Profesionales de Bolsa SA brokerage in Bogota. “Slowing growth translates into controlled inflation, which makes bonds in the long end of the curve attractive.”

Colombia’s economic expansion slowed to 4.2 percent in the second quarter from 4.7 percent in the first three months of the year, according to the median forecast of 29 analysts surveyed by Bloomberg. The government is scheduled to release the figures tomorrow.

Consumer prices rose 3.11 percent in the 12 months through August, near the mid-point of the central bank’s 2 percent to 4 percent annual target range.

Colombia’s borrowing costs fell at the government’s last competitive auction of inflation-linked bonds, known as TES UVR, this year. The Finance Ministry sold 200 billion pesos ($111 million) of securities due in March 2021 to yield 2.9 percent, down from 3.5 percent in the previous auction on Aug. 15.

The peso closed little changed at 1,796.68 per U.S. dollar. The currency has gained 7.9 percent this year.

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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