Colombia Yields Post Biggest Weekly Drop Since 2009; Peso Rises

Colombian peso bond yields fell this week the most since 2009 as Finance Minister Mauricio Cardenas buoyed demand as he said the government will delay a rule intended to encourage pension funds to invest more abroad.

The yields on the securities known as TES due in July 2024 dropped 49 basis points, or 0.49 percentage point, to 6.41 percent this week as of 10:22 a.m. in Bogota. The decline was the biggest since the securities were issued in 2009. The yields were little changed today. The peso advanced 0.3 percent to 1,905.35 per U.S. dollar, extending its weekly rally to 1.2 percent, the biggest since September 2012.

Yields also fell this week as Federal Reserve Chairman Ben S. Bernanke called for maintaining asset purchases that have buoyed demand for emerging-market assets. He said in response to a question after a speech on July 10 that “highly accommodative monetary policy for the foreseeable future is what’s needed” in the U.S. economy.

“The expectation was that funds would be buying less TES going forward as they moved to more foreign securities,” Munir Jalil, the head analyst at Citigroup Inc.’s Colombia unit, said in a phone interview from Bogota. “With concern fading on tapering of stimulus from the U.S., and this pension fund change, it was a good combination in the market.”

Cardenas told reporters in Bogota on July 10 that a proposed change to the way the government measures funds’ returns would be delayed for months. Investors were concerned that the decree would curb pension funds’ demand for peso bonds, according to Jalil.

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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