International investors outflows continue, counter-balanced by larger inflows from locals
- International Investors continued reducing their holdings in COLTES (in both Nominals and Linkers), while the largest buyers were local pension funds, local banks, and Hacienda.
- Pension funds bought COP3.6trn in January 2024, raising holdings to 29.8% from 29.4% in December 2023 (Largest Buyers).
- International investors sold COP2.5trn in January 2024, lowering holdings to 20.8% from 21.6% in December 2023 (Largest Sellers). COP1.5trn was concentrated in nominal COLTES.
- Local banks absorbed c.COP2.9trn. They were the largest buyers of nominal COLTES (+COP3.16trn). Local pension funds followed, buying +COP2.65trn of nominal COLTES.
- BanRep was the second largest seller of nominal COLTES (-COP970mn)
- Hacienda added to its holdings of COLTES (+COP2.11trn), shifting from holding 0.1% to 0.6% of total bonds outstanding. UVRs (linkers) accounted for COP1.1trn.
- Ex-ante real rates look very attractive in Colombia; that is largely because of expectations already baking in a full disinflation process. However, realised near-term structural measures such as Core 3m SAAR remain at levels that make the real rate ex-post the second lowest in the region (after Peru) and raise questions about the potential level of optimism already embedded in expectations and local instruments. Eventually a faster pace of disinflation should start to follow suit, allowing opportunities to allocate to receivers further along the curve, such as the 2Y space. For now, given the uncertainty, our receiving bias would be more towards 6M-18M forward rate receivers once US front-end rates adjust to the recent forward guidance from the Fed. (Latest Views on LatAm Rates and FX)