Colombia Colombia elections: Momentum shifts toward change; Runoff likely

Research evidence excerpt

Colombia Colombia elections: Momentum shifts toward change; Runoff likely

in, under read‑through to the presidential race.

forward outlook improves and a major tail risk is

which we see the 10y getting to 16%. Markets are unlikely

removed, but lingering fiscal and inflation risks limit how

to fully price that outcome after the first round.

far yields can ultimately fall.

The curve should move higher, but less so than TES, Front-end moves are less straightforward, as reduced

driving ASW widening. IBR should steepen, reflecting a Muted reaction as first round results offer limited risk premia would be offset by the possibility of a more

IBR

less hawkish BanRep path and a repricing of risk premia read‑through to the presidential race. hawkish BanRep. Belly and back-end can rally in a

that unanchores long-end yields. similar fashion.

Spreads should continue to widen, and depending on the

A market-friendly result could catalyze a repricing

signaling towards fiscal vulnerabilities and CB Spreads likely remain within a narrow range, with direction

Sovereign toward BB-rated credits, offering around 40bps of

independence could reprice toward single B-rated levels, dictated by fiscal signaling ahead of and between election rounds.

compression as the election risk premium unwinds.

which implies up to 100bps of widening from current levels.

The CEMBI Colombia is trading close to its tightest levels

in three years and, in our view, is poised to retrace a

portion of the rally accumulated over the past 12 months At current spread levels, meaningful compression

Muted as the market has already at least partially priced in this

Corporate credit and YTD. While the magnitude of any widening will be appears difficult to envision under a favorable electoral

scenario.