Colombia Bond Yields Rise on Tax Bill Concern; Currency Weakens

Colombia’s peso-denominated bond yields rose the most in a week amid concern a tax bill won’t be approved by the nation’s legislature this month.

The yield on the 6 percent bonds due in April 2013 rose five basis points, or 0.05 percentage point, to 4.81 percent, the biggest increase since Dec. 3, according to the central bank. The price fell 0.028 centavo to 100.37 centavos per peso.

The tax bill, which includes a proposal to cut the levy on foreigners’ bond profits to 14 percent from about 33 percent, needs to be approved this month in Congress in order to come into effect in 2013. Senator Juan Lozano who is a member of the government’s coalition, told W Radio today that Congress needs more time to debate the initiative, while Finance Minister Mauricio Cardenas told reporters Colombia needs the tax bill.

“The noise surrounding the tax bill is creating some doubts it will pass and that’s having an impact on bonds,” said Daniel Escobar, the head analyst at Global Securities in Bogota.

The peso fell for the first time in five days, weakening 0.2 percent to 1,799.3 per U.S. dollar. It has risen 7.7 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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