Colombia Bonds Post Record Rally on Fund Rule Delay; Peso Rises

Colombian peso bonds posted a record weekly rally after Finance Minister Mauricio Cardenas said the government will delay a rule intended to encourage pension funds to invest more abroad.

Yields on the government’s bonds due 2024 dropped 52 basis points, or 0.52 percentage point, to 6.38 percent this week, the most since they were issued in 2009, according to the central bank. The peso advanced 0.3 percent to 1,904.82 per U.S. dollar at the close of trading in Bogota, extending its gain since July 5 to 1.2 percent.

Cardenas told reporters in Bogota on July 10 that a proposed change to the way the government measures funds’ returns would be delayed for months. Investors were concerned that the decree would curb pension funds’ demand for peso bonds, also known as TES, according to Munir Jalil, the head analyst at Citigroup Inc.’s Colombia unit.

“The expectation was that funds would be buying less TES going forward as they moved to more foreign securities,” Jalil said in a phone interview from Bogota. “With concern fading on tapering of stimulus from the U.S., and this pension fund change, it was a good combination in the market.”

Federal Reserve Chairman Ben S. Bernanke called for maintaining asset purchases that have buoyed demand for emerging-market assets. He said in response to a question after a speech on July 10 that “highly accommodative monetary policy for the foreseeable future is what’s needed” in the U.S. economy.

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