Colombian bonds are one of the alternatives that are using investors as a refuge in times of market turmoil due to economic performance and improvement in public finances that has made the Colombian debt be viewed very favorably by investors for its profitability and safety.
Volatility increases risk aversion and, therefore, market players look for safer and roles require higher returns on their investments. Options include sovereign debt securities and, at this juncture, the bond rates of most European countries continue to rise, this means revaluation.
For instance, the interest of the securities in Greece exceeds 25 %, the Spanish are around 6.3 %and Italy reached 5.6 %.
But in Latin America, the reality is different. While no country has escaped an increased perception of risk in Colombia and some of its peers in the region the increase was lower. This will reflect the rate of their titles. Colombia's global bond has a 10-year rate of 2.9 %, while the titles in Brazil and Mexico with the same period are 3.3 %.
This situation, in other times impossible to imagine, has emerged as a result of the debt crisis and the threat of recession in developed countries, while emerging markets, particularly Latin America, have weathered relatively well the situation.
The risk is also important in the equation: One way to see the perception of risk is the cost of safe that can be purchased to protect against the possibility of default. The CDS, as it is known, it is cheaper for Colombians titles than most countries of the region while the premium for Colombian bonds is 170 points, the Mexicans, Peruvians and Brazilians are between 190 and 200 points. Comparing to European is even better, papers for Italy, you pay 480 points for the Spanish 520 and costs for the Portuguese reached the 677. In the titles of Greece, the CDS is of 10,100 points.
In Colombia the institutions improved fiscal position, as the deficit has been reduced and controlled inflation within the Bank of the Republic. Also the proper behavior that has had the Colombian economy in recent years and prospects compared to GDP growth remain favorable.