Colombia’s Local Bonds Fall Most Since October 2011; Peso Gains

Colombia’s peso bonds fell the most since October 2011 as rising U.S. bond yields eroded demand for emerging-market assets.

The yield on the nation’s benchmark peso bonds due 2024 jumped 22 basis points, or 0.22 percentage point, to 5.62 percent at 2:11 p.m. in Bogota. It has climbed 75 basis points in the past month, the biggest monthly increase since the securities were sold in 2009.

Bonds and currencies have tumbled around the world this month on speculation a pickup in the world’s biggest economy will prompt the Federal Reserve to scale back monetary stimulus. Ten-year U.S. Treasury yields earlier today rose to 2.23 percent, the highest level since April 5, 2012.

“Investors are getting out of emerging markets and going back into developed countries,” said Daniel Velandia, head analyst at Credicorp Capital’s Colombia unit. “In a question of weeks, we’ve seen markets plunge everywhere.”

Colombia’s peso rose for the first time in nine days, strengthening 0.3 percent to 1,892.40 per U.S. dollar at the close of trading in Bogota. Yesterday it touched 1,902.97, the weakest level since Jan. 4, 2012. The peso has fallen 6.6 percent this year.

The government and central bank have increased dollar purchases in the foreign exchange market this year to stem a rally that sent the peso to a 17-month high on Jan. 2. Finance Minister Mauricio Cardenas said in an interview on Blu Radio today that “there is a certain consensus that it’s necessary to continue intervening” in the currency market.

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