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BofA Expect Fiscal Concerns To Weigh On Sovereign External Bonds

COLOMBIA
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  • According to Bloomberg, BofA Securities have downgraded Colombia’s external debt to underweight from marketweight on signs of increasing fiscal risks. They recommend selling Colombian sovereign bonds maturing in 2053 v Brazil’s 2054 notes.
    • BofA strategists say that investors are underpricing the risks of the government changing the fiscal targets this year or next.
    • They note that Colombia trades cheap to its ratings, but see risks that fiscal concerns increase if the fiscal rule is changed.
    • Other risks include larger than expected fiscal slippage, low growth and credit downgrades.
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  • According to Bloomberg, BofA Securities have downgraded Colombia’s external debt to underweight from marketweight on signs of increasing fiscal risks. They recommend selling Colombian sovereign bonds maturing in 2053 v Brazil’s 2054 notes.
    • BofA strategists say that investors are underpricing the risks of the government changing the fiscal targets this year or next.
    • They note that Colombia trades cheap to its ratings, but see risks that fiscal concerns increase if the fiscal rule is changed.
    • Other risks include larger than expected fiscal slippage, low growth and credit downgrades.