Colombia’s peso bond yields fell the most in two years after a government report showed the economy grew less than forecast, spurring speculation the central bank will lower borrowing costs tomorrow.
The yield on the 9.25 percent peso-denominated securities due in May 2014 tumbled 17 basis points, or 0.17 percentage point, to 4.72 percent, its biggest reduction since May 2010, according to the central bank. The yield on the country’s benchmark debt maturing in July 2024 fell three basis points to 5.85 percent.
Policy makers unexpectedly lowered the overnight lending rate last month by a quarter-percentage point to 4.5 percent to boost a slowing economy. Banco de la Republica will lower the benchmark to 4.25 percent tomorrow, according to four of 31 economists surveyed by Bloomberg. The rest project the target rate will hold steady.
“The GDP number isn’t good,” Eduardo Bolanos, an analyst at Asesores en Valores brokerage in Bogota, said in a phone interview. “Chances of another cut tomorrow have increased a lot.”
The national statistics agency said today that the economy expanded 2.1 percent in the third quarter from a year earlier, compared with a 4.9 percent pace in the prior period. The median forecast of 28 economists surveyed by Bloomberg was for a 3.9 percent expansion.
The peso rose 0.2 percent to 1,788.33 per dollar at the close in Bogota, extending its gain this year to 8.4 percent.