Colombia Bond Yields Fall From Two-Month High Touched After Sale

Colombian peso bond yields fell from a two-month high on speculation yesterday’s increase following a government debt offering was excessive.

The yield on the government’s 6 percent peso-denominated bonds due in April 2013 dropped three basis points, or 0.03 percentage point, to 5.07 percent, according to the central bank. The yield jumped yesterday to its highest level since Aug. 8 following a government auction of peso bonds. It surged 22 basis points this week, the biggest increase since the period ended April 29.

The Finance Ministry sold yesterday 519 billion pesos ($285 million) of short-term securities, less than the 670 billion pesos offered. The auction came amid reduced volume after the government said Nov. 7 that it would liquidate Interbolsa SA’s brokerage, which failed to meet a loan payment.

“There’s thin trading and yields are moving at a range so when they reach certain levels, some see a buying opportunity,” said Francisco Chaves, a strategist at brokerage Corredores Asociados in Bogota.

Colombia said this week it will sell as much as 4 trillion pesos worth of short-term securities through the end of this year to drain liquidity created by foreign-exchange market intervention. At yesterday’s sale, the bonds due in January 2014 were sold to yield 5.5 percent, those due November 2014 yielded 5.5 percent and November 2015 bonds yielded 5.7 percent.

“The bonds were sold at high yields given the difficult local environment,” said Daniel Escobar, the head analyst at Global Securities brokerage in Bogota.

The central bank and government stepped up dollar purchases this year to ease a rally in the local currency that policy makers say is threatening jobs in agriculture and industry by making exports more expensive in dollar terms.

The peso closed little changed at 1,824.05 per U.S. dollar. It dropped 0.5 percent this week and has risen 0.4 percent in November, the most among emerging-market currencies.

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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