The Colombian IGBC stock index rose Wednesday, led by shares of state-controlled oil company Ecopetrol SA, which announced the discovery of a gas deposit in northeastern Colombia.
The IGBC benchmark index rose 1.4%, to 14,411.19 points. The Colcap index, which includes the largest companies by market capitalization, rose 1.2%, to 1,735.68 points.
Shares of Ecopetrol rose 3.2% to end at a record high of 3,735 Colombian pesos ($2.07).
The company reported Wednesday that a well drilled in the northeastern province of Norte de Santander found methane gas and yielded about 6.6 million cubic feet of gas a day.
“This is certainly good news, but it is early to say it will make a big difference for the company,” Felipe Sanchez, an analyst with local brokerage Serfinco, said. “In my opinion, the market over reacted.”
The yield on the benchmark Colombian peso-denominated government bond, or TES, maturing in 2020, rose to 7.31% from 7.242% on Tuesday.
The yield has risen from 7.069% last Thursday. Investors started to sell the bonds after the government announced it will sell COP2 trillion more in local bonds in 2011 than previously planned, Daniel Lozano, a debt strategist with Serfinco, said.
People anticipated that the higher supply of bonds would mean lower prices. Bond yields move inversely to prices.
“The bond price was very high, so people took advantage of the government announcement to sell and pocket recent gains,” he said.
The Colombian peso strengthened to COP1,805 to the dollar from COP1,807.1 on Tuesday. (Inti Landauro / Dow Jones)
