Colombia’s dollar bond yields fell the most in three months after Fitch Ratings increased the nation’s credit rating one step to BBB, in line with Brazil, South Africa, Spain and Russia.
Yields on bonds due 2021 fell 11 basis points, or 0.11 percentage point, to 3.88 percent at 1:53 p.m. in Bogota. The country’s peso, which had weakened as much as 0.3 percent in early trading, erased losses after the Fitch upgrade and was little changed at 1,934 per U.S. dollar.
Fitch said in a statement today that it raised Colombia’s foreign-currency debt rating because of the country’s manageable debt load, policy stability and growth prospects. The new rating is two levels above junk grade, and the outlook is stable. Colombia’s previous BBB- rating was in synch with those of Azerbaijan, Turkey and Uruguay.
“Colombia’s medium-term growth prospects remain favorable compared with several of its rating peers and should be supportive of fiscal performance,” Erich Arispe, an analyst at Fitch in New York, said in the statement.
Fitch’s new rating on the country is in line with Standard & Poor’s assessment and one level higher than the grade from Moody’s Investors Service.
While Colombia’s dollar-denominated government bonds have lost 9.6 percent this year, they’ve outperformed securities from Brazil, which have dropped 12 percent, according to data compiled by JPMorgan Chase & Co.
Colombia obtained an investment-grade credit rating in 2011 for the first time in a decade as improved security bolstered economic growth and attracted record foreign investment. Congress passed legislation that year known as the fiscal rule, which allowed the nation to sock away for future years any windfalls from higher commodity prices.