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COLOMBIA: Financial Comments

Overview: Hunting the Wind

Emerging market bond prices drifted lower on Tuesday. The JPM EMBI+lost 0.55%, ending the session at 395. Treasuries were firm, with the 10-year Note closing at 4.46%. However, there was a lack of enthusiasm for the emerging markets. Colombian bonds were the big losers, retreating 1% and ending the session at 423. Colombian bonds were under pressure for the past month and are now trading in line with The Philippines. While the Filipino government addressed some of its fiscal problems, Colombia refuses to do so.

President Uribe is more obsessed with securing a second term in office, and the major political factions in Colombia are too busy extracting their toll for supporting his personal ambitions. Colombia has the worst credit-metrics in Latin America. Colombia's only meaningful asset is the political support from the U.S.--the IMF's largest shareholder. Therefore, investors draw comfort that Colombia will receive the necessary multilateral assistance if it faces an economic crisis. Unfortunately, Washington is a fickle friend, just ask the Argentines. Colombia would be better served, if it put Uribe's ambitions aside and focused on getting its economic house in order.

By viewpoint on Apr 5, 2005, 05:57 in Politics & the war.

Mr. Hollywood says on Apr 6, 2005, 05:26:

Wall street is nervous about whether or not the re-election legislation will survive the supreme court. The uncertainty of who might run/win if Uribe isn't allowed to run is a big question mark to investors, especially given the poor "credit metrics" of the country.

0 funny, 0 helpful.

lpdiver says on Apr 21, 2005, 12:34:

All this may be true But the peso exchange rate has not risen. In fact it is still drifting lower.???

T

"cook some rice!"

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