Bloomberg News

Colombia Peso Bond Yields Rise Most in Two Weeks on S&P Warning

December 06, 2011

Dec. 6 (Bloomberg) -- Colombia’s peso bonds fell, pushing yields to rise the most in two weeks, after Standard & Poor’s warning that it may downgrade 15 euro nations led to reduced appetite for higher-yielding, emerging-market assets.

The yield on the nation’s 10 percent bonds due in July 2024 rose six basis points, or 0.06 percentage point, to 7.6 percent, according to the stock exchange. That’s the biggest increase since Nov. 23. The bond’s price fell 0.544 centavo to 118.973 centavos per peso.

Germany, France and four other nations may lose their AAA credit ratings depending on the result of a summit of European Union leaders on Dec. 9, S&P said yesterday. S&P said today the European Financial Stability Facility may also lose its top rating. European leaders are due to gather in Brussels amid an ongoing effort to resolve the euro region’s debt crisis.

“The market is awaiting results of this week’s summit,” said Omar Escorcia, an analyst at Asesores en Valores SA brokerage in Bogota. “The S&P warning adds to the uncertainty, and it translates into less demand for emerging market assets.”

Colombia’s benchmark bonds due 2024 earlier gained after a report showed consumer prices rose less than estimated last month.

Consumer prices rose 0.14 percent in November, led by an increase in communications, transport and health costs, the national statistics agency said in a report late yesterday. Economists expected monthly inflation of 0.19 percent, according to the median of 30 forecasts compiled by Bloomberg. Prices for food, which has a 28 percent weight on the consumer price index, fell 0.05 percent, according to the report.

Reduced Volumes

Low trading volume this month, as is usual ahead of the year-end holidays, will likely keep the bonds due 2024 trading between 7.50 percent and 7.85 percent for the remainder of 2011, said Carlos Ramos an analyst at Interbolsa SA, Colombia’s biggest brokerage.

Annual inflation was 3.96 percent in November, down from 4.02 percent in October, which was the first time in two years that inflation surpassed the central bank’s 2 percent to 4 percent target.

The peso rose 0.1 percent to 1,933.40 per U.S. dollar, from 1,935.55 yesterday.

--Editors: Marie-France Han, Richard Richtmyer

To contact the reporter on this story: Andrea Jaramillo in Bogota at

To contact the editor responsible for this story: David Papadopoulos at

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