Colombian Peso Drops to
Two-Week Low on European Debt Crisis
By Andrea Jaramillo
(Bloomberg) - Colombia’s peso fell to the
lowest level in two weeks as Europe’s
sovereign debt crisis led investors to take
refuge in the U.S. dollar, cutting demand
for higher-yielding, emerging-market assets.
The peso slid 0.6 percent to 2,011.45 per
U.S. dollar at 3:34 p.m. New York time, the
weakest closing level since May 7, from
1,999.75 yesterday.
“There’s an international run for the dollar
as investors seek refuge,” said Carlos
Ramos, an analyst at Interbolsa SA,
Colombia’s biggest brokerage. “Locally,
we’re seeing speculators sell some of their
peso bond holdings.”
The yield on Colombia’s benchmark 11 percent
bonds due July 2020 was little changed at
8.28 percent, according to Colombia’s stock
exchange. The bond’s price fell 0.018
centavo to 118.136 centavos per peso.
Yields on the 2020 peso bonds, known as TES,
earlier rose to as much as 8.36 percent on
concern the government will issue more local
bonds following the postponement of the sale
of power company Isagen SA.
President Alvaro Uribe’s administration will
hold off on the sale of the government’s 57
percent stake in Isagen, allowing the next
government to decide on what to do with the
asset when it takes office in August,
Finance Minister Oscar Ivan Zuluaga said on
May 14. The 2010 budget estimates 3 trillion
pesos ($1.49 billion) from the sale.
Overseas Bonds
Colombia’s Congress yesterday approved
government plans to sell an additional $800
million in overseas bonds this year or next.
The government had asked Congress for
authorization to sell more foreign bonds
should a “window of opportunity arise,” said
a Finance Ministry official who declined to
be named, citing ministerial policy.
Ramos estimates the next government will
have to raise as much as 1.7 trillion pesos
should it decide not to sell Isagen, after a
debt swap in April helped reduce this year’s
financing needs by 1.3 trillion pesos.
Colombia will likely choose to sell
peso-denominated bonds abroad, known as
Global TES, to cover the budget gap,
according to Ramos.
“The $800 million adjusts perfectly to what
the government would need,” said Ramos. |
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