Home Markets UPDATE 1-Colombia’s markets under pressure after second downgrade to ‘junk’

UPDATE 1-Colombia’s markets under pressure after second downgrade to ‘junk’

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By Rodrigo Campos and Marc Jones

July 2 (Reuters) – Colombia’s markets were under pressure on Friday a day after Fitch became the second major credit rating agency to downgrade the country’s credit rating to ‘junk’.

The move from Fitch follows the loss of investment grade category at S&P Global in May. The country is now rated below investment grade by two of the world’s top three rating agencies, potentially forcing some holders of Colombian debt to sell.

The premium demanded by investors to hold Colombia’s debt over safe haven U.S. Treasuries jumped by 6 basis points (bps) to 256 bps – its highest since early October 2020, the JPMorgan EMBI index showed.

Five-year credit default swaps rose 6 bps to 143 bps, data from IHS Markit showed, while the Colombian peso softened as much as 0.6% in early local trading before trimming the losses.

The rating downgrade “was to a significant extent expected and warranted given the recent…

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