Colombia Bond Yields Decline on Increased Liquidity; Peso Gains

Colombia’s peso bond yields fell for a fourth day amid speculation that declines this month in long-term debt were excessive and as traders reinvested the proceeds of local bonds that matured.

Yields on the government’s peso bonds maturing in 2024 fell two basis points, or 0.02 percentage point, to 4.89 percent at the close of trading in Bogota, pushing the decline this week to 11 basis points, according to the central bank. The spread between the benchmark bond and the central bank’s overnight rate rose to 1.64 percentage point today from 1.02 percentage points two months ago.

“The curve has been steepening and that’s creating attractive levels given inflation is controlled and the central bank likely won’t be hiking rates anytime soon,” John Jairo Ramirez, an analyst at brokerage Bolsa y Renta SA, said in a telephone interview from Medellin.

5.1 trillion pesos ($2.8 billion) were injected into the market this month from peso bonds that matured, said Ramirez.

The peso appreciated 0.2 percent to 1,837.08 per dollar. It dropped 0.6 percent this week and 3.8 percent this year.