Colombian bond yields climb to 12.70% amid fiscal concerns

Yields on Colombian government domestic debt instruments rose sharply following the presentation of the 2027 General National Budget proposal totaling COP 634.9 trillion. The government project outlined an initial fiscal deficit of 9.4% of GDP, alongside a proposed spending cut of COP 45 trillion to lower executed spending to COP 590 trillion, aiming to bring the central administration deficit down to 7.2% of GDP and the primary deficit to 2.3% of GDP.

The yield on peso-denominated TES bonds maturing in 2036 climbed from 11.9% to 12.5%, later reaching peaks of 12.51% and 12.70%. In one-year paper, yields rose from 12.40% to 12.45% in recent Ministry of Finance auctions, while the bid-to-cover ratio declined from 3.7 to 3.3. In inflation-indexed debt, five-year UVR TES yields rose to 6.27% and ten-year references reached 6.30% in September.

The country risk spread measured by the J.P. Morgan EMBI rose from 1.79 points on June 17, 2026, to 2.09 points on September 16, 2026. At 2.06 points on September 15, Colombia traded above regional peers including Mexico at 1.97 points, Brazil at 1.64 points, and Chile at 0.89 points. In dollar-denominated sovereign debt, the yield on Colombian notes maturing in 2036 increased from 6.4% in June to 7.26%.