Yields on Colombian government peso-denominated treasury bonds, or TES, sold Wednesday on the primary market, rose as investors are concerned about this year’s deficit.
The Colombian Treasury sold COP389 billion (US$198 million) worth of TES with a total demand of COP917 billion, according to a statement from the Finance Ministry.
“The market is nervous because of the fiscal uncertainty,” Francisco Chaves, a debt strategist with local brokerage Corredores Asociados, said. Finance Minister Oscar Ivan Zuluaga said Tuesday the government will postpone some spending to keep the deficit “sustainable”. Zuluaga will give details about the postponements on Monday.
“If the government itself thinks the fiscal situation for this year will be difficult and it will have to tighten its belt, investors are getting nervous,” he said.
Additionally, inflation probably bottomed in December, Chaves said. Consumer prices rose 2% in 2009, the lowest figure on record, and people expect inflation to pick up in the coming months, so investors demand higher yields on the local bonds.
The bond sale was the first this year.
In Wednesday’s auction, the yield on the TES maturing in 2024 was 8.797%. In a swap held in late November, the government issued bonds maturing in 2024 with a yield of 7.998%.
The yield on the bond maturing in 2013 was 6.59% compared with 6.10% during the swap and the yield on the 2016 bond was 7.25% compared with 7.10% during the swap.