Colombian Bond Yields Rise on Slower China Growth

Colombia’s peso bonds fell, pushing yields on benchmark securities to the highest level in three weeks, as signs of slower growth in China led to reduced demand for higher-yielding assets.

The yield on Colombia’s 10 percent peso-denominated bond due July 2.024 rose three basis points, or 0.03 percentage point, to 7.36 percent, according to the central bank. 

Yields are at the highest since Feb. 24. 

The price fell 0.319 centavo to 120.871 centavos per peso.

Signs of a slowdown in China boosted concern about the world economy, leading investors to decrease holdings of higher- yielding, emerging-market assets, said William Florez, an analyst at Helm Bank SA (PFBHELMB)’s brokerage unit in Bogotá.

China’s steel production is slowing, according to Ian Ashby, president of iron ore at BHP Billiton Ltd. (BHP), the world’s third-largest exporter. 

Automobile sales may miss industry forecasts this year as economic growth slows, an official from the China Association of Automobile Manufacturers said.

Yields also rose on forecast for economic growth ahead of the government’s report this week, Florez said in a telephone interview. 

“With expectations for higher growth, the market starts anticipating rate increases going forward, which impacts the longer-dated maturities,” he said.

The national statistics agency will report 2011 annual growth of 5.9 percent on March 22, according to the median forecast of 23 economists. 

Banco de la Republica increased the overnight lending rate 25 basis points to 5.25 percent on Feb. 24, the ninth increase since January 2.011. 

Policy makers next meet on March 23.

The peso rose 0.1 percent to 1,757.95 per U.S. dollar. It has jumped 10 percent this year, the third-biggest advance among all currencies. 

Colombian markets were closed yesterday for a holiday.