Colombia Yields Fall to Record Before CPI Report; Peso Advances

Colombia’s peso bond yields fell to a record on speculation a report today will show inflation slowed below the central bank’s target range last month, boosting the appeal of fixed-rate securities.

Yields on peso bonds maturing in 2024 decreased two basis points, or 0.02 percentage point, to 4.95 percent at 9:41 a.m. in Bogota, according to the central bank. That is the lowest level on a closing basis since the securities were issued in 2009. The price rose 0.189 centavo to 143.065 centavos per peso.

The yields have fallen 25 basis points in the past month as policy makers lowered the overnight lending rate six times beginning in July amid slumping economic growth. Annual inflation slowed to 1.89 percent in February, according to the median forecast of 23 economists surveyed by Bloomberg before today’s 7 p.m. government report.

“Expectations are for inflation to remain low, which provides support for further gains in bonds,” said William Florez, a strategist at Helm Bank SA’s brokerage in Bogota. “The economy isn’t doing well, and if inflation remains low and data continue to be this bad, there is room for more cuts.”

The inflation rate fell in January to 2 percent, at the bottom of the bank’s target range of 3 percent plus or minus one percentage point. Banco de la Republica is due to hold its next monetary policy meeting March 22.

The peso advanced 0.3 percent to 1,808.95 per U.S. dollar, paring its drop this year to 2.3 percent.

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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