Colombia’s dollar bonds dipped to near all-time lows, following President Gustavo Petro’s comments on the idea of a “transitory tax on hot money flows” and an increase in land tax. This came despite Finance Minister Jose Antonio Ocampo’s reassurances that the government will not tax capital outflows or impose capital controls. As per Bloomberg, Colombia’s 5Y CDS spread rose 16bp to 332bp. Colombia’s dollar bonds have also ticked lower and have seen a downward trend since August (as seen in the chart below). Since Petro’s election in June 2022, the Colombian Peso has dropped more than 15% against the dollar as investors are wary of political risks arising from his policies and pledges to end new oil exploration. William Snead, a strategist at BBVA in New York said, “Petro’s comments are creating unnecessary noise and uncertainties, and that makes investors uneasy…Bonds are definitely cheap at current levels but there needs to be some reassurance.”
Colombia’s Dollar Bonds Near All-time Lows
