Colombia Peso Bonds Fall to Three-Year Low Amid Debt Exchange

Colombia’s peso bonds slid to a three-year low after the government said it will carry out a debt exchange with the National Treasury to reduce payments in 2016.

Benchmark bonds due July 2024 fell 0.19 centavo to 118.24 centavos per peso at 10:14 a.m. in Bogota trading, reaching the lowest level since November 2011 according to data from the central bank. The yield rose 3 basis points, or 0.03 percentage point, to 7.2 percent.

The government will buy back local bonds held by the Treasury due October 2015 and June 2016 and provide in exchange securities maturing 2017 to 2030, allowing the nation to issue less debt next year, the Finance Ministry said Tuesday.

“Given the amount of bonds coming due in 2016, it was expected we’d see a debt swap sooner or later,” Sergio Ferro, an analyst at Credicorp Capital’s Colombia unit, said in a telephone interview from Bogota. “Depending on the amount they buy back, the government might need to do a debt swap with bondholders at some point as well.”

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