One-year Treasury bills (TES) rates hit a new record in auction number 13 by the Public Credit Directorate, reaching 13.693%. This surpasses the previous high and marks a 2.2 percentage point increase so far this year. The upward trend raises concerns over the Colombian Government's borrowing costs.
In the latest auction, the cutoff rate for short-term TES, known as TCO, reached 13.693%, the highest ever for one-year bonds. This marks a significant rise in costs for the Government, with a real rate near 8.4% after subtracting 5.29% inflation.
Rates have climbed from 11.490% in the year's first auction to 13.050% by late February, surpassing that in March. Meanwhile, a yield curve inversion appears, with 10-year TES at 12.872%, indicating higher short-term risk perception.
Diego Montañez-Herrera, economic analyst at Universidad Eafit, stated: "The Government of Colombia is facing an accelerated rise in its debt costs. It now pays 13.69% on one-year debt, the highest recorded for that maturity. The issue is not just the rate, but the term. More expensive short-term debt implies greater pressure to refinance soon."
Pressures from increased public spending and the Central Bank's policy rate hike to 11.25% are driving this trend, raising the baseline cost of money in the economy.
