| BOGOTA, March 19
BOGOTA, March 19 Colombia's peso staged its
strongest rally in six months after investment bank J.P. Morgan
announced on Wednesday it will boost the weighting of the
country's peso-denominated debt in two closely followed emerging
market bond indexes.
In a note circulated to investors, J.P. Morgan said it will
introduce five new Colombian Treasury bonds, known as TES, in
its GBI-EM Global Diversified and GBI-EM Global indexes.
The new instruments - maturing in 2016, 2018, 2022, 2024
and 2028 - will be included in a phased approach over five
month-end periods, starting on May 30 and ending on Sept. 30, it
Generally, an increased weighting of a country in major
indexes leads to more investment in that nation's securities
since investment fund managers are often judged against the
"COP (the Colombian peso) and TES bonds staged a huge rally
after (the J.P. Morgan) announcement," Citibank said in a note.
"The weight increase should generate very significant inflows
into TES bonds. "
Colombia's peso strengthened 1.17 percent on
Wednesday to 2007 to the dollar while public debt appreciated
across the entire maturity curve. It was the peso's strongest
appreciation since Sept. 19 last year.
In announcing the move to boost Colombia's weighting in the
indexes, J.P. Morgan cited "improved transparency and
accessibility for international investors in the local TES
As a result, the bank said Colombia's participation in J.P.
Morgan's GBI-EM Global Diversified index will rise to 8 percent
up from 3.2 percent previously and in the GBI-EM Global, it will
increase to 5.6 percent from 1.8 percent
On March 3, the director of public credit, Michel Janna,
told Reuters in an interview that the country was preparing
reforms to boost sales of its debt to foreign investors.
Janna was referring to the need to make an even deeper cut
to the tax foreigners pay on earnings from debt investments even
after it was slashed to 14 percent from the start of 2013, down
from 33 percent previously.
That cut raised the proportion of Colombia's debt in foreign
hands to around 7 percent up from 2 percent in 2012, still a
comparatively low figure for the region, Janna said. He added
foreign ownership of Mexican and Peruvian debt is between 40 and
Janna considers 15 to 20 percent a desirable level of
foreign ownership of the country's public debt.
Colombia's increased weighting may come at the expense of
the that of Turkey, Russia, Thailand, Indonesia and Hungary, the
announcement from the bank warned.
The TES bonds that will be introduced in the bank's indexes
expire on June 2016, November 2018, May 2022, July 2024 and
(Writing by Peter Murphy Editing by W Simon)