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Colombian Peso Bond Yields Decline on Inflation Expectations

Dec. 13 (Bloomberg) -- Colombia’s peso bonds rose, pushing yields on benchmark securities lower, after a central bank survey showed year-end inflation expectations remained little changed.

The yield on Colombia’s 10 percent bonds due in July 2024 fell two basis points, or 0.02 percentage point, to 7.59 percent, according to the stock exchange. The bond’s price rose 0.139 centavo to 119.088 centavos per peso.

Economists predict inflation will end this year at 3.64 percent, according to the median forecast in the central bank survey published yesterday. That compares to 3.62 percent in last month’s survey. Annual inflation quickened to 4.02 percent in October, breaching the central bank’s 2 percent to 4 percent target range for the first time since April 2009, before slowing to 3.96 in November.

“This is good news because it shows that last month’s rate hike helped anchor inflation expectations,” said Francisco Chaves, an analyst at brokerage Corredores Asociados SA in Bogota.

Banco de la Republica raised the overnight lending rate by 25 basis points to 4.75 percent on Nov. 25, making Colombia the only country in Latin America to increase rates in the past four months.

The Colombian peso strengthened 0.1 percent to 1,929.55 per U.S. dollar, from 1,931.39 yesterday. The currency has slipped 1 percent in the past month.

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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