Bloomberg News

Colombia Peso Bond Yields Rise Most in Week on Inflation Concern

November 04, 2011

Nov. 4 (Bloomberg) -- Colombia’s peso bonds fell, pushing yields up the most in a week, amid speculation higher food prices stoked inflation in October.

Colombian notes also declined as demand for higher-yielding assets dropped after Group of 20 leaders failed to agree on increasing the resources of the International Monetary Fund. That dashed the hopes of European governments keen to tap more foreign aid to bolster their crisis-fighting efforts.

The yield on Colombia’s benchmark 10 percent bonds due in July 2024 rose two basis points, or 0.02 percentage point, to 7.46 percent. That’s its biggest increase since Oct. 28. The bond’s price fell 0.168 centavo to 120.339 centavos per peso.

“With so much noise coming out of Europe and locals worrying about inflation, investors are closing positions” ahead of tomorrow’s inflation report and the long weekend, said Camilo Contreras, an analyst at Ultrabursatiles SA brokerage in Bogota. Colombian markets are closed Nov. 7 for a holiday.

Annual inflation quickened to 3.96 percent in October from 3.73 percent the previous month, according to the median estimate of 19 economists surveyed by Bloomberg. The national statistics agency is slated to release the monthly report tomorrow at about 1 p.m. Bogota time.

Colombia’s central bank targets inflation between 2 percent and 4 percent this year.

The peso dropped 0.3 percent to 1,911.50 per U.S. dollar, from 1,905.07 yesterday. The currency has plunged 2.6 percent since Oct. 28, its biggest weekly decline since the period ended Sept. 23.

--Editors: Richard Richtmyer, Marie-France Han

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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