In February, international investors reversed course and reduced their holdings of Colombian TES by c. COP4.2tn; total participation stood at 25.6% versus 26.3% in January. For the month, commercial banks and foreign investors were the main sellers while retirement funds were the main buyers. The change in positioning seems to be something of a reflection of the performance of the TES curve, which underperformed other LatAm peers, with an average yield increase of c.85bp and a steepening bias, at the same time as the COP underperformed LatAm FX peers. The lacklustre performance of Colombian assets coincides with the risk-off sentiment seen during the month, and Colombia as a high-beta country tends to overshoot performance in either direction; it was also negatively impacted by various local headlines ranging from utility tariff policies to the reforms agenda. The central bank governor signalled that the interest-rate hike cycle might be close to an end, but this is likely to depend on the path of inflation, which remains at a historical high level although the market seems to be looking for it to peak during the first quarter. So far in March, the performance of Colombian assets has improved, as some investors take some comfort from the country’s strong institutions and legal framework, which could provide the necessary check and balances. We remain cautious and await the results of some of the reform debates in congress; consensus and compromise should be beneficial for Colombian assets but investors might be waiting for specific actions in the right direction.