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Investors burned by Colombian brokerage collapse

Tuesday, November 20, 2012

The collapse of Colombia’s largest brokerage is burning foreign investors who piled into what had been one of this year’s hottest emerging markets.

Yields on $5 billion of dollar bonds sold by Colombian banks have jumped since the government was forced to take over Interbolsa's brokerage this month.

That has pushed up borrowing costs by an average 26 basis points, or 0.26 percentage point, from a record low on October 17. That’s about five times the average increase in yields of emerging-market financial institutions’ bonds in the same period, according to JPMorgan Chase & Co.

Source: Bloomberg