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Colombia Yields Rise Most in 2 Weeks on Higher-Than-Forecast CPI

Dec. 7 (Bloomberg) -- Colombia’s peso bonds fell, causing yields to increase the most in two weeks, as concern mounted about a pickup in November inflation.

The yield on benchmark 11 percent bonds due 2020, known as TES, rose 14 basis points, or 0.14 percentage point, to 7.48 percent at 3:15 p.m. New York time, according to Colombia’s stock exchange. That’s the biggest increase since Nov. 19. The bond’s price dropped 1.089 centavo to 123.475 centavos per peso.

Consumer prices rose 0.19 percent last month, the national statistics agency said Dec. 4, almost double the median forecast for a 0.10 percent increase among 20 economists surveyed by Bloomberg. Higher inflation damps returns on fixed-rate bonds, prompting investors to demand a higher yield.

“Investors have been looking for an excuse to sell TES and inflation is giving them one,” said Camilo Perez, head analyst at Banco de Bogota SA, the nation’s second-biggest bank.

Perez forecasts annual inflation will quicken to 2.7 percent in December from 2.59 percent last month, as higher-than-average rain pushes food prices up. The central bank targets inflation of 2 percent to 4 percent this year.

Rains have damaged 195,000 hectares (481,855 acres) of crops in Colombia or about 4 percent of the country’s farmed land, according to the Colombian Agriculture Society.

Colombia’s peso weakened 0.2 percent to 1,894.15 per U.S. dollar, from 1,889.65 yesterday.

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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