Colombian Bond Yields Rise After GDP Report; Peso Declines

Colombia’s peso bond yields rose to a six-week high on speculation the central bank will leave borrowing costs unchanged tomorrow after a report showed economic growth accelerated in the fourth quarter.

Yields on peso bonds due 2024 increased 10 basis points, or 0.1 percentage point, to 5.20 percent at the close of trading in Bogota, the highest since Feb. 4, according to the central bank. The yield has jumped 28 basis points this week.

Gross domestic product grew 3.1 percent in the last three months of 2012 from a year earlier, the national statistics agency said today in Bogota, exceeding the median forecast of 3 percent among analysts surveyed by Bloomberg. GDP expanded 4 percent during the whole of 2012 after the central bank had estimated growth of 3.3 percent to 3.9 percent for last year.

“Given the market was betting on a much weaker fourth-quarter number, now some are taking the view we won’t see a cut tomorrow,” Jorge Cardozo, an analyst at Corredores Asociados brokerage in Bogota, said in a phone interview.

Central bank policy makers will lower borrowing costs by 25 basis points to 3.5 percent on March 22, according to 29 of 32 analysts and economists surveyed by Bloomberg. The other three expect rates to remain unchanged. Policy makers have cut the overnight lending rate by 150 basis points since July to buoy growth in the Andean country.

The peso depreciated 0.1 percent to 1,819.91 per U.S. dollar in its sixth day of losses, the longest losing streak since October.

Finance Minister Mauricio Cardenas told flower growers in Bogota yesterday that Colombia must do everything possible to weaken the currency.

Before it's here, it's on the Bloomberg Terminal.