EM LATAM CREDIT: Colombia: FX Appreciation - Positive
(COLOM; Baa3/BBneg/BB+neg)
The government has been reportedly selling USD raised from its latest bond sales and buying pesos (COP), about USD1.7bn in the past three days, which has helped the currency appreciate, according to Bloomberg.
Some analysts quoted by Bloomberg believe this trend may continue in part due to these FX operations but also influenced by other factors such as US Fed monetary policy.
With almost half of Colombia's debt in external hard currency, a stronger Colombia peso should ease the overall debt burden a bit. A stronger COP should also be supportive for lower inflation in the future, all else being equal.
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PIPELINE: Corporate Bond Roundup: $1.05B SEB Launched
- Date $MM Issuer (Priced *, Launch #)
- 08/25 $1.05B #Skandinaviska Enskilda Banken AB (SEB) $750M 5Y +73, $300M 5Y SOFR+106
US: FED Reverse Repo Operation
RRP usage rises to $47.567B this afternoon from $36.275B Friday -- compares to $22.344B on Tuesday, Aug 19 - lowest since April 5, 2021. Total number of counterparties at 23. This year's high usage of $460.731B on June 30.
US TSY FUTURES: Paring Losses, Curves Bull Flattening
- Still weaker, Treasury futures are climbing off midday lows, curves bull flattening (2s10s -1.166 at 54.362, 5s30s -1.076 at 110.403).
- Tsy Sep'25 10Y contract trading near NY open levels: TYU5 -3.5 at 112-01 vs. 111-27.5 low. Sights are on 112-15+, the Aug 5 high and the bull trigger. Clearance of this hurdle would resume the uptrend and pave the way for a climb towards 112-23 initially, the May 1 high.
- Heavy volumes tied to robust rolling ahead Friday's First Notice when Dec'25 contracts take lead.
