Bloomberg News

Colombia Bonds Gain on Liquidity, CPI Outlook; Chile Peso Falls

June 30, 2009

Colombia’s peso bonds rose, sending yields to their lowest in more than two weeks, on speculation slowing inflation and increased liquidity from government securities coming due next month will boost demand for debt.

The yield on Colombia’s 11 percent bonds due in July 2020 fell 10 basis points, or 0.10 percentage point, to 9.20 percent at 11:22 a.m. New York time. It earlier touched 9.19 percent, its lowest since June 12. The bond’s price rose 0.722 centavo to 112.146 centavos per peso, according to Colombia’s stock exchange.

“The amount coming due is large and most of that liquidity likely will be reinvested in short-term debt,” said Daniel Velandia, head analyst at Bogota-based brokerage Ultrabursatiles SA. “People have also been lowering their inflation expectations and that has been helping demand.”

Colombia’s Finance Ministry is set to pay out about 6 trillion pesos ($2.8 billion) for its securities due July 10.

Annual inflation slowed to 4.03 percent this month compared with 4.77 percent in May, according to the median forecast of nine economists surveyed by Bloomberg News. The national statistics agency is slated to release its inflation report on July 4. Velandia forecasts annual inflation slowed to 3.82 percent amid a 0.6 percent drop in food prices.

Colombia’s peso was little changed, gaining 0.1 percent to 2,148.90 per dollar, from 2,150.65 yesterday.

Markets in Colombia, Chile, Peru and Venezuela were closed yesterday for a national holiday.

In Chile, the peso slid 0.5 percent to 531.25 per dollar, from 528.55 yesterday. The yield for a basket of the country’s 10-year peso bonds in inflation-linked currency units, called unidades de fomento, rose four basis points to 2.95 percent, according to Bloomberg composite prices.

To contact the reporter on this story: Andrea Jaramillo in Bogota at ajaramillo1@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net


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