Colombian stocks were posting strong gains Thursday morning, lifted by renewed optimism on the country’s economic outlook after Standard & Poor’s rating agency improved Colombia’s debt rating to investment-grade.
Colombia’s blue-chip index was up 3.46%, to 14357.68 points, in morning trading. The surge comes after five days of steep losses that brought the index to a seven-month low on Wednesday.
Gains in the IGBC were led by Pacific Rubiales Energy, a Toronto-based oil firm that has seen its stock pummeled on recent days on a disappointing earnings report and analysts’ adjusting their price targets on a clause that could reduce the company’s participation in one of its most important oil blocks.
Pacific Rubiales recovered some of the losses of the last few days and was up 5.4% to COP52,700.
The wider gains in the index were fueled by the upgrade announced Wednesday by Standard & Poor’s. The move to investment grade, which was widely expected, will allow foreign investors that are limited to only buying investment-grade assets to invest in Colombia.
Finance Minister Juan Carlos Echeverry said Thursday in an interview with local radio station Caracol that the country expected to receive more debt-rating upgrades soon from the other credit-rating agencies.
One risk stemming from the change to investment grade is that it could mean higher inflows of foreign capital to Colombia, leading to an appreciation of the peso, which has been a chronic worry for the government. Echeverry said Thursday that the government “has the instruments to offset an excessive inflow of dollars.”
The peso traded at COP1,877.9 to the dollar Thursday at noon from COP1,892.8 a day earlier.
(Darcy Crowe, Dow Jones)
