J.P. Morgan to boost Colombia bond weighting, peso up most in 6 months

miércoles 19 de marzo de 2014 13:51 GYT

By Nelson Bocanegra

BOGOTA, March 19 (Reuters) - Colombia's peso staged its strongest rally in six months after investment bank J.P. Morgan announced on Wednesday it will boost the weighting of the country's peso-denominated debt in two closely followed emerging market bond indexes.

In a note circulated to investors, J.P. Morgan said it will introduce five new Colombian Treasury bonds, known as TES, in its GBI-EM Global Diversified and GBI-EM Global indexes.

The new instruments - maturing in 2016, 2018, 2022, 2024 and 2028 - will be included in a phased approach over five month-end periods, starting on May 30 and ending on Sept. 30, it said.

Generally, an increased weighting of a country in major indexes leads to more investment in that nation's securities since investment fund managers are often judged against the benchmarks.

"COP (the Colombian peso) and TES bonds staged a huge rally after (the J.P. Morgan) announcement," Citibank said in a note. "The weight increase should generate very significant inflows into TES bonds. "

Colombia's peso strengthened 1.17 percent on Wednesday to 2007 to the dollar while public debt appreciated across the entire maturity curve. It was the peso's strongest appreciation since Sept. 19 last year.

In announcing the move to boost Colombia's weighting in the indexes, J.P. Morgan cited "improved transparency and accessibility for international investors in the local TES market."

As a result, the bank said Colombia's participation in J.P. Morgan's GBI-EM Global Diversified index will rise to 8 percent up from 3.2 percent previously and in the GBI-EM Global, it will increase to 5.6 percent from 1.8 percent   Continuación...