Colombia’s peso bonds rallied as faster-than-forecast growth and speculation inflation will stay near the mid-point of the central bank’s target buoyed demand for the fixed-rate securities.
The yield on the government’s 10 percent peso-denominated debt due in July 2024 fell two basis points, or 0.02 percentage point, to 6.44 percent, according to the central bank. That’s the lowest level on a closing basis since the securities were first issued in 2009. The price rose 0.169 centavo to 128.807 centavos per peso.
“Growth is good and inflation is under control,” said Pedro Ospina, an analyst at Interbolsa SA, the country’s biggest brokerage. “Given what’s happening in terms of growth abroad and the positive fundamentals in Colombia, there’s a lot of appetite for Colombian assets.”
Colombia’s economy grew 4.9 percent in the second quarter from a year earlier, according to a government report last week, beating the forecasts of all 29 analysts surveyed by Bloomberg.
Ospina forecasts the yield on the benchmark bonds due 2024 will fall to 6.40 percent this week. There is room for gains in the medium and long end of the local bond curve, he said.
Consumer prices rose 3.11 percent in the 12 months through August, near the mid-point of the central bank’s 2 percent to 4 percent annual target range.
The peso weakened for a second day, dropping 0.1 percent to 1,800.40 per U.S. dollar. It has jumped 7.7 percent this year.