Summary: flows were mixed among local COLTES investors in June. Sellers included Public Entities, Financial Corporates, Mutual Funds, Public Trust Funds, and Public Financial Institutions; which in total sold COP9.4trn. This outflow was mostly offset by Pension Funds, Commercial Banks, Local Insurance Companies, Financing Companies and International Investors totaling roughly COP8trn in additional allocation. In addition, the Finance Ministry bought just under COP3.9trn in COLTES, confirming active bond buying in the secondary market for its strategic reserve portfolio in June, which is likely to continue in July. The FinMin focused on nominals (+COP3.7trn in nominals and only +0.1trn in linkers). Net issuance totalled c.COP2.8trn in June from c.COP5.9trn in May and c.COP16trn in April.
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Market View: In light of the recent local bond downgrade from IG to non-IG, investors have seen this as an opportunity to fade weakness and add to COLTES. They have also continued taking down the ASW spread (going long cash bonds and paying in swaps). Overall, the curve has flattened significantly, driven by tenors in the 10Y area and further out along the curve. Given the recent move and the execution of the Hacienda’s recent repurchases, the belly is now flagging in terms of value, including COLTES 2033s, which offer the best yield/carry in this segment of the curve with a decent roll-down supporting reallocation into the belly of the curve from longer dated-tenors. In addition, the reconstruction of the PCA curve suggests value in the 7Y to 10Y area, with the largest positive residuals in the 8Y maturity. We would look at entering Long COLTES 2033 at 11.91% with a target of 11.50% and a stop of 12.10%.
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The Ministry of Finance/Hacienda was the main buyers of COLTES in June, increasing its allocation by a sizeable COP3.87trn. Virtually all purchases were concentrated in the Nominal TES market in a shift that drove holdings to COP5.4trn (+144% MoM) or from 0.3% to 0.8% of the COLTES market, confirming active bond buying in the secondary market for its strategic reserve portfolio in June, which is likely to continue in July. The FinMin focused on nominals (+COP 3.7trn nominals and only +0.1trn linkers).
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Pension funds the second largest buyers of COLTES in June, adding c.COP2.8trn, which reflected an increase in allocation of 1.4% vs. the 0.4% growth rate of the total COLTES market that led to a slight decrease in holdings to 31.0% from 31.1% in April 2025. Purchases were concentrated in inflation linkers (UVR) amounting to COP1.0trn, with some small net sales in nominals of COP 0.3trn.
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International investors’ COLTES allocation picked up in June by c.COP721bn. The supply growth of 0.0.4% MoM in COLTES meant holdings grew from 17.04% in May to 17.08% in June, and the allocation has continued to trend higher since the recent bottom of 16.91% in April. Interestingly, foreign investors have been active in purchasing nominals, although have also been allocating towards UVRs (Inflation Linkers) in June. The allocation to Nominals accounted for c.COP573bn of inflows and linkers for c.COP148bn.
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Insurance Companies were the third largest buyers of COLTES but concentrated in UVR linkers (+COP1.84trn), which shifted the allocation for Insurance companies 2.4% higher MoM. As a result, Insurance companies’ holdings in grew slightly to 12.1% in June from 11.9% in May.
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Public Entities and Trust Funds, Mutual Fund and Financial Corporates were the main sellers of COLTES in June dropping a total of COP8.8trn of COLTES. Public entities dropped COP3.1trn, Mutual funds COP2.9trn, Financial Corporates COP1.6trn, and Public Trust Funds COP1.1trn. The holdings of Public entities fell from 0.8% in May to 0.3% in June, Mutual funds: 3.0% to 2.5%, Financial corporates: 0.7% to 0.5%, and Public Trust Funds: 8.1% to 7.9%.
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Commercial Banks bought COLTES totaling COP1.8trn, increasing their holdings to c.COP103.1trn (+1.7% MoM), which pushed ownership up c.0.2pp to 16.0%. Net purchases were concentrated in UVR linkers (c.COP1.7trn of UVR sales).