Bloomberg News

Colombian Bond Yields Fall to Two-Week Low on Inflation Outlook

March 27, 2012

Colombia’s peso bonds gained, sending benchmark yields to a two-week low, as concern eased that inflation will quicken in the South American country.

The yield on the country’s 10 percent peso-denominated bonds due in 2024 fell six basis points, or 0.06 percentage point to 7.23 percent in Bogota, according to the central bank. The bonds’ price rose 0.502 centavo to 122.048 centavos per peso.

Colombian central bankers held the benchmark rate at 5.25 percent on March 23, saying investors’ inflation expectations were falling, after increases at both their January and February meetings. The gap between yields on government inflation-indexed bonds due in 2013 and similar-maturity fixed-rate debt, a gauge of annual consumer price increase expectations, fell to 3.15 percentage points today from 4.07 percentage points on Feb. 17, the highest this year.

“The stabilizing inflation expectations are definitely a factor,” said Jorge Cardozo, an analyst at Bogota-based brokerage Corredores Asociados SA.

The annual inflation rate held near a six-month low in February, indicating Banco de la Republica’s nine interest rate increases in the past 13 months have helped contain consumer demand growth as the economy expanded. Colombia’s economy expanded at the fastest pace since 2007 last year, led by a surge in oil and mining exploration.

The peso fell 0.2 percent to 1,763.80 per U.S. dollar, from 1,760.75 yesterday. It has gained 9.9 percent this year, the second-biggest advance after the Mexican peso among major Latin American currencies tracked by Bloomberg.

To contact the reporter on this story: Christine Jenkins in New York at cjenkins28@bloomberg.net

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


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