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Colombia’s Leftist Candidate Has Bond Market on Edge Before Vote

  • Sunday’s presidential election keeping investors on their toes
  • Local and dollar bonds have underperformed regional peers
Gustavo Petro
Gustavo PetroPhotographer: Nathalia Angarita/Bloomberg

Three days before Colombians head to the polls for presidential elections, the mood in the bond market is uneasy. The rise of Gustavo Petro, a former guerrilla-turned-leftist politician, is unnerving traders who worry that the economic model that the nation has practiced for decades -- a combination of fiscal discipline and a heavy dose of free markets -- could be dismantled.

The government’s foreign bonds are among those in a region that has been hit hard by the global rout in debt markets this year, and yields on its local notes have spiked to their highest levels in more than a decade. Credit default swaps surged and now top those of Brazil, which has a junkier rating.