Colombia Bond Yields Rise Most This Month on Interest-Rate View

Colombia’s peso bond yields rose the most in September as investors pared bets policy makers will cut borrowing costs after a report showed the economy grew in the second quarter faster than forecast.

The yield on Colombia’s 6 percent peso-denominated debt due in April 2013 increased five basis points, or 0.05 percentage point, to 4.73 percent, according to the central bank. That is the biggest advance since Aug. 29. The yield was up nine basis points for the week.

“There’s no pressure to cut interest rates at the next meeting,” said Daniel Lozano, the head analyst at Serfinco SA brokerage in Bogota. “The bond curve is flattening as people see the central bank keeping rates unchanged at least for a few more months.”

Colombia’s economy grew 4.9 percent in the second quarter from a year earlier, the national statistics agency said yesterday. The median forecast of 29 economists surveyed by Bloomberg was for growth of 4.2 percent.

The central bank cut the target rate in August for a second straight month, lowering it by a quarter-percentage point to 4.75 percent. Banco de la Republica will next decide on monetary policy on Sept. 28.

The peso depreciated 0.2 percent to 1,798.35 per U.S. dollar, paring its rally in 2012 to 7.8 percent. The currency is down 0.3 percent this week.

Colombia’s economy may see Asia-like growth of 6 percent to 7 percent “for decades” if the government strikes a peace deal with Marxist rebels in soon-to-begin negotiations, Finance Minister Mauricio Cardenas said.

A deal with guerrillas of the Revolutionary Armed Forces of Colombia, or FARC, may open the country’s eastern plains to Brazilian-style agribusiness and divert tax revenue from security and defense spending to more productive use, Cardenas said in an interview at his Bogota office.

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

To contact the editor responsible for this story: Brendan Walsh at Bwalsh8@bloomberg.net

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