Credit markets shrug off Colombia's negative outlook
By Paul Kilby
NEW YORK, Feb 17 (IFR) - Markets were largely shrugging off S&P's decision to revise Colombia's outlook to negative on Wednesday, as higher crude prices helped support the oil exporter's bonds.
While S&P's move was seen as the first step to a downgrade, the affirmation of Colombia's BBB rating brought some comfort to investors expecting a more rapid decline in its credit standing - perhaps to junk.
"They can still get downgraded a notch and still keep the investment grade," said a New York-based trader, noting Moody's and Fitch have the sovereign at Baa2/BBB with a stable outlook.
"We are seeing decent demand from locals, as they have more comfort that the government has more time to get its house in order."
The sovereign's 2026s were up about an 1/8 of a point early Wednesday at 93.625-94.125, bolstered by a rise in oil prices.
Markets fret that government has been too slow to address fiscal imbalances caused by the oil plunge as it focuses on ending Latin America's longest-running civil war.
State-controlled oil company Ecopetrol was cut to Baa3 - a notch above junk - by Moody's in January, and many saw a similar fate for the sovereign.
"With oil above US$30 and no two-notch downgrade imminent, it takes away some of the overhang people feared after the Ecopetrol downgrade," said the trader. Continuación...