Colombian Bond Yields Rise From Record Low; Peso Little Changed

Colombia’s peso bonds dropped for the first time in seven days, pushing yields up from a record low as traders pared bets on a cut in the target lending rate at the central bank’s policy meeting today.

Yields on the government’s 10 percent peso-denominated debt due in 2024 climbed one basis point, or 0.01 percentage point, to 5.24 percent at 10:19 a.m. in Bogota, according to the central bank. The price fell 0.117 centavo to 140.247 centavos per peso. Yields dropped on Jan. 25 to 5.23 percent, the lowest close since the securities were first issued in 2009.

“The market already has a rate cut today priced in, but there’s always the possibility of a surprise,” said William Florez, a fixed-income strategist at Helm Bank SA’s brokerage in Bogota. “There are always people who prefer to sell and take the profit because of the fear.”

Yields have tumbled 42 basis points in January in what would be their eighth monthly drop on speculation the central bank will cut its 4.25 percent overnight lending rate at its policy meeting today to support the nation’s economy.

Banco de la Republica will lower its benchmark by a quarter-percentage point, according to 31 of 33 economists surveyed by Bloomberg. The other two expect policy makers to leave borrowing costs unchanged.

The peso was little changed at 1,780.67 per dollar.

To contact the reporter on this story: Christine Jenkins in Bogota at cjenkins28@bloomberg.net

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

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