Colombia’s Debt Is Already Trading as Though it Were Junk

Colombia’s dollar bonds are being priced as though they were already junk as investors bet that the government will fail to raise taxes enough for the country to cling onto its investment-grade credit rating.

The nation’s international bonds are the worst performers in Latin America since a tax bill was introduced two weeks ago, to widespread opposition. Colombia’s borrowing costs are roughly in line with those of junk-rated nations such as Brazil, Guatemala, Uzbekistan and Azerbaijan, reflecting pessimism that the Andean nation will be able to slash its deficit.