Colombia’s Peso Bond Yields Fall on Lower Inflation Outlook

Colombia’s peso bonds rose, pushing yields on benchmark securities lower for the first time in four days, as reduced inflation bets boosted the appeal of the fixed-rate debt.

The yield on Colombia’s 10 percent peso-denominated debt due in July 2024 fell four basis points, or 0.04 percentage point, to 7.09 percent, according to the central bank. The bond’s price rose 0.359 centavo to 123.276 centavos per peso.

“Lower inflation expectations continue to drive gains” in peso bonds, known as TES, said Juan Camilo Santana, an analyst at Cia. de Profesionales de Bolsa SA, a brokerage in Bogota. “Although it’s raining again, people aren’t worried the weather is going to pressure inflation.”

Colombia’s inflation will end this year at 3.29 percent, according to the median estimate in a central bank survey published April 12, down from a projected 3.45 percent expansion in the March survey. Annual inflation slowed to 3.40 percent in March, the national statistics agency said in an April 4 report, less than the 3.63 percent median estimate among economists in a Bloomberg News survey. Banco de la Republica has an inflation target of between 2 percent and 4 percent this year.

Rainfall soaking farms in central growing areas this month probably will last through June, Colombia’s state-run weather agency said in an April 16 statement. Floods in 2010 and 2011 damaged crops and choked off farmers’ supply routes, pushing food prices higher.

The peso was little changed at 1,774 per U.S. dollar. The peso is up 9.3 percent this year, the best performer among all currencies tracked by Bloomberg.

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