When everyone else was running for the exits, Pimco walked straight in.
The bond giant has quietly become the largest foreign investor in Colombia's local bond market during a period when most other international money managers were selling.
Colombia has been through a rough stretch. Under former President Gustavo Petro, who led the country from 2022 to 2026, the government suspended its fiscal rule, the deficit ballooned to nearly 8% of GDP, and S&P cut the country's credit rating to BB-, the lowest in its history. That is junk territory, meaning the country's debt is considered risky enough that many big institutional investors are not allowed to touch it.
Colombia's fiscal troubles did not emerge overnight. The suspension of the fiscal rule followed years of rising public spending, and the deficit reached levels not seen in decades. The BB- rating placed the country on par with other stressed sovereigns, forcing many pension funds and institutional investors to divest under their internal risk mandates. That created the selling pressure that Pimco chose to absorb.
The fiscal rule had been a key pillar of investor confidence since its adoption, but its suspension marked a turning point. The exodus only accelerated as more funds hit their risk limits.
Most foreign investors took the hint and left. Singaporean state investors and Franklin Templeton each reduced over $1.3 billion from their positions. Japan's Government Pension Investment Fund and Vanguard funds got out entirely.
When others flee, the smart money often moves in, so get the free Always Be Buying E-Book to master that contrarian mindset.
Pimco went the other way. Without Pimco's purchases, foreign investors would have been net sellers of Colombian peso bonds during the entire 2022-2026 term.
The result: Pimco's share of foreign holdings in Colombia's local bond market climbed from 1.4% four years ago to 27% now.
That contrarian bet is looking pretty smart right now. The gains come from three things: the world's strongest currency rally, high yields, and optimism about the newly sworn-in president, Abelardo de la Espriella.
By November of last year, Pimco had already tripled its holdings of Colombian TES, as the country's bonds are called, to $1.9 billion. The Treasury then conducted a year-end debt-management operation that included a $7.5 billion private placement involving Pimco. By late December, Pimco's TES holdings had reached roughly $8 billion, and it has kept buying since.
Pimco declined to comment on its specific investments. That is pretty standard for the firm, but the numbers tell the story on their own.
De la Espriella started his term promising to fix the fiscal outlook. That is the kind of talk bond markets like to hear, and it is a big reason the rally has momentum.
But the new president was handed a nearly immediate challenge. An Aug. 10 earthquake is expected to cause billions in damages, and that bill will come due while the government is still trying to repair its finances.
For regular investors, the takeaway is a little more subtle. This is a story about what happens when a big player like Pimco decides a market is mispriced and everyone else is too scared or too restricted to join in. Colombia's investor base has shifted to those willing to hold junk-rated securities, and that has made the market more concentrated and more dependent on a few big decisions.
The gains are real, and they are big. But they come with the kind of risk that only shows up when a market is leaning on a handful of large bets. If you are watching from the sidelines, the lesson is less about Colombia specifically and more about how the biggest winners in markets are often the ones who show up when everyone else is leaving.
Buying when others are scared takes patience, so download the free Always Be Buying E-Book for a simple system.