(Adds comments from Moody's)
By Paul Kilby
NEW YORK, Oct 3 (IFR) - Colombian US dollar bonds were
opening multiple points lower on Monday after the country
narrowly rejected a peace accord with FARC rebels over the
The sovereign's 2026 bonds had fallen 1.875 points to
108.40-109.15, while the 2045s were 3.125 points weaker at
104.90-105.90, according to a US based trader.
The market had been largely bullish on the oil exporting
country following a rebound in crude amid expectations that the
sovereign would soon reap a peace dividend from the end of Latin
America's longest running civil war. But the surprise no vote
took investors off guard.
"With the rally in crude oil, Colombia had been favored
again and (the no vote) is catching people long and wrong," the
trader told IFR.
Bonds issued by state-controlled oil company were also being
hit despite oil prices breaching US$50 a barrel on Monday -
their highest level since August.
The company's 2025s had slipped about 1.75 points to hit
95.00-96.00, while the 2045s were about 2.5 points lower at
89.25-90.25, the trader said.
President Juan Manuel Santos's failure to sway the populace
to back his peace plan is expected to complicate the outlook for
"It had been expected that Santos would use (the peace
accord) as a platform to launch his fiscal reform, which would
be positive for the credit and its ratings, and this has put a
wrench in that," said the trader.
While the government is likely to present its fiscal package
by October 10 to avoid a ratings downgrade, political
uncertainty will likely cloud the scope of reforms, Nomura said
in a report on Monday.
"We expect turbulence down the road, given the direct
consequences over the fiscal reform," the bank said.
Rejection of the peace deal will not impact Fitch's ratings
for the country, Reuters quoted the agency's sovereign ratings
director Erich Arispe saying on Monday.
Fitch has the country's BBB rating on a negative outlook,
which Arispe said was largely due to external conditions such as
the fall in the price of crude.
S&P has a long-term issuer rating of BBB on Colombia, with a
negative outlook, while Moody's rates it Baa2, with a stable
"Colombia's plebiscite is negative for its credit profile,"
Samar Maziad, a senior analyst at the agency said in an email on
Colombians' rejection of the peace deal will undermine the
passage of fiscal reforms that are necessary to address the
shortfall in oil-related revenues, he said.
(Reporting By Paul Kilby; editing by Shankar Ramakrishnan)