Hacienda, pension funds, and local banks were the largest buyers of COLTES in June, with Mutual Funds and Brokers the biggest sellers. BanRep halted its selling in June and actually made purchases, although at a moderate pace. International investor holdings of COLTES fell during the month amid issuance and mild selling, driving foreigner holdings to their lowest level since June 2016.
- International investors only sold c.COP0.1trn in June 2024. As a result, holdings shifted lower to 20.1% from 20.6% in May 2024. Holdings are now at their lowest level since June 2016. UVR holdings (linkers) rose to 4.6% in June from 4.4% in May. The overall flow saw a c.COP0.6trn outflow from nominals and an inflow of c.COP0.5trn into UVR (linkers).
- Pension funds were one of the largest net buyers of COLTES in May with inflows of c.COP 2.6trn (c. 19% of monthly net issuance,). Nevertheless, holdings still moderated to 31.1% from 31.5% in May 2024, as the net issuance take up was lower than the previous percentage of stock holdings. Inflows into nominals amounted to COP3.1trn, while UVR holdings registered outflows of c.COP 0.5trn.
- BanRep halted its selling of COLTES but purchases were minimal, allowing holdings to fall to 4.4% in June from 4.5% in May.
- Local banks absorbed c.COP2.2trn (16% of monthly net issuance), with the c.COP2.9trn of inflows going into nominal COLTES and UVR linkers seeing outflows of c.COP 0.8trn. Holdings remained unchanged 14.8% in June.
- Hacienda was the largest buyer of COLTES in June. The entity bought c.COP6.9trn in June with holdings jumping to roughly 1.7% of total bonds outstanding from 0.4% in May. Nominal COLTES purchases amounted to c.COP 4.7trn, while UVR purchases totaled c.COP 2.1trn.
- Pension funds continue to prefer nominal TES given the elevated real rates being offered (~5%). At the same time their holdings of the UVR market continues to decline. These funds see value in allocating to local fixed income, and to some extent prefer these holdings to foreign equities, hence the continued allocations to the space in the past months. As expected in last month's holding report, BanRep halted its selling in June, as historical average holdings of BanRep are closer to 4.0-5.0%, and holdings now stand at 4.5%. In terms of rates policy, BanRep has been cautious in the light of high inflation. Nevertheless, recent improvements in core inflation and a drive among board members to lower rates more aggressively provides a good chance for BanRep to accelerate and allow for a larger scope of rate compression back towards neutral. We now expect this acceleration to 75bp cuts to begin as of September. For this reason, Colombia remains one of our preferred countries for rate receivers, specifically the short-end in IBR and the belly in COLTES.