Colombia may be awarded investment grade rating by July, Echeverry says

Ratings firms may upgrade Colombia to investment grade in the first half of this year, though the exact timing depends on the companies, Finance Minister Juan Carlos Echeverry said on a conference call with investors.

Standard & Poor’s in July raised its outlook on Colombia’s foreign debt to positive, followed by Moody’s Investors Service in September. S&P, Moody’s and Fitch Ratings all rate the securities one level below investment grade.

Colombia may be the next Latin American country to be raised to investment grade, Joydeep Mukherji, senior director of Latin American sovereign ratings for S&P, said in a conference call on Jan. 11.

Colombia lost its investment grade rating with Moody’s Investors Service 11 years ago when insurgent violence and a banking crisis helped trigger six straight quarters of contraction in 1998 and 1999. S&P also cut Colombia below investment grade in 1999.

Colombia’s peso fell 0.01 percent to 1,869.15 per U.S. dollar at 9:18 a.m. New York time, from 1,868.90 yesterday. The yield on Colombia’s benchmark 11 percent bonds due July 2020 rose 0.27 percentage point to 8.092 percent, according to Colombia’s stock exchange.

The central government’s budget deficit last year was 3.9 percent of gross domestic product and the consolidated budget deficit was 3 percent, according to preliminary figures, Echeverry said.

The ministry had earlier projected a deficit of 4.3 percent for the central government and 3.6 percent for the consolidated budget deficit.

The government maintained its projection for the 2011 central government deficit of 4.1 percent of GDP, though Echeverry said the deficit may come below 4 percent this year. The consolidatedbudget deficit estimate was widened for this year to 3.5 percent from an earlier estimate of 3.2 percent, Echeverry said.

(Helen Murphy, Bloomberg)

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