Commercial Banks, Public Entities, Pension Funds, Public Trusts, and Mutual Funds made up the bulk of COLTES buyers in November. Hacienda and international investors comprised just about all of the selling flow during November. The nominal TES market saw supply expand by COP9.9trn and this was absorbed by the key players mentioned above. Hacienda selling activity took place in both the nominal TES market and UVR linkers (COP708bn and COP2.25trn, respectively). International investors sold in both the nominal and UVR linker markets (COP1.06trn and COP 1.62trn, respectively). The UVR market saw supply contract by COP2.49trn back towards its size in June 2024, after peaking at COP191.16trn in August.
-
Market view: COLTES have underperformed the recent US rates rally, amid continued domestic fiscal noise that represents an increase in fiscal risk premia. In addition, November core CPI YoY was stagnant, with CPI ex-food and regulated items rising a fraction to 5.36% from 5.35%. As a result, BanRep is likely to continue to cut at the current 50bp pace until March, rather than accelerate. All of this has created a challenging environment for Colombian bond yields, resulting in broader international investor outflows. While our economists see BanRep’s terminal rate in the cutting cycle reaching 6.50% by October 2025, near-term catalysts for rallies in rates seem limited for the time being.
-
International investors sold c.COP2.9trn of COLTES in November 2024. As a result, holdings fell to 18.1%, from 18.8% in October 2024, and remain close to their lowest level since March 2016. UVR holdings (linkers) fell to 3.8% in November from 4.6% in October. The overall flow saw c.COP1.26trn of outflows from nominals and c.COP1.62trn from UVR.
-
Pension funds, although not the largest buyer in the month, continued to buy a notable amount of COLTES in November, with inflows of c.COP1.9trn, growing allocation by 1.1pp (slightly slower than the 1.3% growth of the local bond market). As a result, holdings have remained near 32%. Inflows into nominals amounted to COP1.6trn, while UVR holdings registered minor inflows of c.COP302bn. Pension funds continue to shift holdings towards nominals vs. linkers as real yields remain elevated.
-
BanRep holdings were virtually flat in November. Meanwhile, Public Entities bought c.COP2.6trn of TES, driving their holdings to 1.2% in November from 0.7% in October. Inflows were primarily concentrated in nominal COLTES (c.COP2.6trn).
-
Local banks were the largest net buyers, with c.COP3.7trn during November, taking holdings from 14.8% to 15.3%. The breakdown shows most of the inflows going to nominal COLTES (c.COP3.4trn). This takes total COLTES holdings to COP88.5trn, nominal TES holdings to COP66.0trn and UVRs to COP22.5trn.