Bloomberg News

Colombia Peso Bond Yields Fall to Three-Month Low on Rate Bets

January 24, 2012

Jan. 24 (Bloomberg) -- Colombia’s peso bonds rose, pushing yields on benchmark bonds to fall to a three-month low, on speculation the central bank will hold off on raising interest rates this month.

The yield on the nation’s 9.25 percent bonds due in May 2014 fell two basis points, or 0.02 percentage point, to 6.06 percent, according to the stock exchange. That’s the lowest level on a closing basis since Oct. 19. The bond’s price rose 0.032 centavo to 106.607 centavos per peso.

“With inflation under control, central bankers will likely place greater emphasis on the external situation,” said Omar Escorcia, an analyst at Asesores en Valores SA brokerage in Bogota. “There are no risks that signal the need for a hike” at the Jan. 30 policy meeting, he said.

Policy makers last month left the overnight lending rate unchanged, after raising it in November, saying in a statement accompanying the decision that the balance of risks is “very sensitive” to new data about the local and global economy.

Global stocks fell and the U.S. dollar rose today as a stalemate between European policy makers and Greek bondholders over how to resolve the nation’s debt crisis spurred concern the it may fail to make a March 20 bond payment.

The Colombian peso closed little changed at 1,814 per U.S. dollar, from 1,813.80 yesterday. The peso has jumped 6.9 percent in 2012, the best performance among all currencies tracked by Bloomberg.

HSBC Holdings Plc said today it agreed to sell its operations in Costa Rica, El Salvador and Honduras to Colombia’s Banco Davivienda SA for $801 million.

Davivienda, the country’s third-biggest lender, has the funds to close its acquisition of HSBC assets in Central America, Efrain Forero, the bank’s president, told reporters in Bogota. The bank may seek additional financing, though it wouldn’t be necessary, Forero said.

--With assistance from Blake Schmidt in Bogota. Editors: Brendan Walsh, Richard Richtmyer

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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