Colombian Yields Rise to Six-Week High on Inflation Concern

Colombia’s peso bonds fell, pushing yields on benchmark securities to a six-week high, on concern heavier-than average rain will stoke inflation and after the U.S. economy expanded less than previously estimated, hurting appetite for higher-yielding emerging-market assets.

The yield on the 10 percent bonds due in July 2.024 rose three basis points, or 0.03 percentage point, to 7.58 percent, according to the central bank. 

That’s its highest level since Oct. 7. The bond’s price fell 0.275 centavo to 119.1920 centavos per peso.

“Inflation expectations and external volatility are weighing down on” the fixed-rate peso bonds, known as TES, said Wilson Tovar, head of research at brokerage Acciones y Valores SA in Bogota.

Growth in the U.S. climbed at a 2 percent annual rate from July through September, less than projected and down from a 2.5 percent prior estimate, revised Commerce Department figures showed today in Washington. 

The median forecast of 81 economists called for no revision.

The U.S. is Colombia’s biggest trading partner, buying about 40 percent of the South American nation’s exports.

Annual inflation in Colombia quickened to 4.02 percent in October, above the central bank’s 2 percent to 4 percent target for this year, according to a government report dated Nov. 5. 

It was the first time since 2.009 that inflation exceeded the central bank’s target. 

It’s “highly probable” that inflation will end this year at 3.5 percent, central bank chief Jose Dario Uribe said Nov. 11.

Consumer prices rose 0.19 percent last month, driven by higher food and health prices, according to the report.

Colombia’s weather agency said yesterday that rains will persist because of the La Nina weather pattern which triggers above-average rainfall. 

Floods last year and at the beginning of this year damaged crops and choked off farmers’ supply routes, pushing food prices higher.

The peso advanced 0.5 percent to 1,918.53 per U.S. dollar, from 1,928.20 yesterday.