Colombian Bond Yields Fall on Interest-Rate Outlook; Peso Gains

Colombia’s peso bonds rose, pushing yields toward a record low, after central bank Co-Director Juan Jose Echavarria said some policy makers see the potential for further interest-rate reductions after a cut this week.

Yields on the government’s 10 percent peso-denominated debt due in 2024 dropped two basis points, or 0.02 percentage point, to 5.26 percent at 10:30 a.m. in Bogota, according to the central bank. The price rose 0.206 centavo to 140.014 centavos per peso. Yields closed on Jan. 25 at 5.23 percent, the lowest since the securities were first issued in 2009.

Colombia will probably keep cutting its benchmark interest rate if fourth-quarter growth was weak, Echavarria told reporters in Bogota yesterday. Some members of the central bank’s policy committee see room for further interest-rate cuts, said Echavarria, one of seven members of the Banco de la Republica board.

Echavarria’s comments support the view that the central bank may cut interest rates again, said Camilo Perez, the head analyst at Banco de Bogota SA. “There’s a high probability that we’ll see more cuts,” Perez said.

Banco de la Republica reduced its benchmark rate by a quarter-percentage point to 4 percent on Jan. 28, as forecast by 31 of 33 analysts surveyed by Bloomberg. The next meeting is scheduled for Feb. 22.

The peso strengthened 0.1 percent to 1,776.90 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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