Colombia’s peso bond yields dropped the most in three weeks on speculation policy makers will lower borrowing costs further this year after reports indicated that the Andean nation’s economy is slowing.
The yield on the 9.25 percent peso-denominated debt due in May 2014 fell six basis points, or 0.06 percentage point, to 4.86 percent. The decrease was the biggest since Sept. 25 on a closing basis. The price rose 0.076 centavo to 106.419 centavos per peso.
“The economy is getting a cold,” said William Florez, an analyst at Helm Bank SA (PFBHELMB)’s brokerage in Bogota. “Not a major cold, but it does give way for one more rate cut this month.”
Future rate decisions will depend on global growth and the domestic economy, Colombia’s central bank said in minutes of its Sept. 28 meeting released Oct. 12. Policy makers held the target lending rate at 4.75 percent after two cuts since June from 5.25 percent. The next meeting is Oct. 26.
Industrial production fell 1.9 percent in August from a year earlier, the government’s statistics agency said yesterday after the close of markets. The median forecast of economists in a Bloomberg survey was for a 1.1 percent increase. Retail sales rose 1.2 percent in August from a year earlier, according to a separate report yesterday, trailing the median forecast of 1.7 percent expansion.
The peso depreciated 0.1 percent to 1,798.60 per U.S. dollar. It fell 0.1 percent this week, and has rallied 7.8 percent this year.
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