Colombia Bond Yields Plunge on Decree Reprieve; Peso Advances

Colombian peso bond yields fell the most in three years after Finance Minister Mauricio Cardenas said the government will delay a decree that encourages pension funds to invest more abroad.

Yields on Colombia’s benchmark peso bonds due in July 2024 fell 31 basis points, or 0.31 percentage point, to 6.40 percent at 3:43 p.m. in Bogota, according to the central bank. That is the biggest drop since May 2010.

Cardenas told reporters in Bogota yesterday that it would delay for months the decree, which would change the way the government measures funds’ returns. The announcement of the decree in April had curbed demand for the peso securities, known as TES, and had left pension funds on the sidelines amid the global rout, according to Francisco Chaves, the head analyst at Corredores Asociados brokerage in Bogota.

“The decree had led to speculation pension funds would need to sell TES bonds to invest more abroad,” Chaves said in a phone interview from Bogota. “You see big institutional investors coming back in after they had remained on the sidelines in the midst” of the global selloff.

The peso advanced 0.5 percent to 1,910.45 per U.S. dollar. It is down 7.5 percent this year.

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