Colombia is bucking a global trend: Around the world, bond markets are struggling, but more than half a billion dollars has flowed into the Colombian bond market since the start of the year.
$622.5 million has been invested into Colombia’s bond market since the start of January, fund flow tracker EPFR Global told the Wall Street Journal on Tuesday.
According to Investopedia, a bond is simply a type of loan where investors lend a company or government money when they buy its bonds. In exchange, the company pays an interest “coupon” at predetermined intervals (usually annually) and returns the original amount on the maturity date, ending the loan.
Turmoil in Mexico, Argentina and Venezuela, combined with Colombia’s low inflation rates, have made it one of the more attractive destinations in Latin America.
Colombia’s bond market has lots of room to grow: just over 6% of Colombia’s local currency bonds are held by foreign investors, compared to with nearly 40% in Mexico and around 50% in Peru.
But it is not all good news. Like most other emerging-market currencies, the Colombian peso has depreciated against the dollar, down 5.6% so far this year, as the Federal Reserve gradually winds down its stimulus program. That has reduced profits for foreign holders of Colombia’s local bonds.
Colombia is bucking a global trend: Around the world, bond markets are struggling, but more than half a billion dollars has flowed into the Colombian bond market since the start of the year.
$622.5 million has been invested into Colombia’s bond market since the start of January, fund flow tracker EPFR Global told the Wall Street Journal on Tuesday.
According to Investopedia, a bond is simply a type of loan where investors lend a company or government money when they buy its bonds. In exchange, the company pays an interest “coupon” at predetermined intervals (usually annually) and returns the original amount on the maturity date, ending the loan.
Turmoil in Mexico, Argentina and Venezuela, combined with Colombia’s low inflation rates, have made it one of the more attractive destinations in Latin America.
Colombia’s bond market has lots of room to grow: just over 6% of Colombia’s local currency bonds are held by foreign investors, compared to with nearly 40% in Mexico and around 50% in Peru.
But it is not all good news. Like most other emerging-market currencies, the Colombian peso has depreciated against the dollar, down 5.6% so far this year, as the Federal Reserve gradually winds down its stimulus program. That has reduced profits for foreign holders of Colombia’s local bonds.
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