Colombia could launch a bond issue in Japan next year following its successful $500 million bond sale in November, Finance Minister Juan Carlos Echeverry said Tuesday.
Colombia could tap cheaper financing in Japan since interest rates there are at rock bottom levels, Echeverry added. Japanese authorities invited Colombia to launch the issue during the recent International Monetary Fund gathering in Washington, the finance minister said.
Colombia’s public credit office, which is part of the Finance Ministry, will be responsible for studying the possible sale and the amount that could be issued, Echeverry said.
The Colombian government sold 45 billion yen ($500 million) worth of 10-year bonds in Tokyo in November 2009 to finance its budget for that year. Yen-denominated bonds issued in Japan by foreign borrowers are called Samurai bonds.
Echeverry also didn’t rule out future interest rate cuts by the Colombian central bank, a move which business groups are pushing for in hopes that it will help rein in the surging peso.
“There’s always space to take measures and we’re studying them” Echeverry said Tuesday regarding a possible rate cut by the central bank. Colombia’s key benchmark interest rate already stands at a historic 3% low. Echeverry, as finance minister, seats in the central bank’s seven-member board.
The peso has strengthened more than 13% this year as a result of foreign direct investment, which is expected to reach $10 billion this year. On Monday a group of leading business federations requested that the authorities take more forceful measures to curb the peso’s rally.
The group demanded that the central bank take advantage of the low inflation readings for the last 12 months and slash interest rates.
The business federations also asked the central bank to step up its dollar purchases in the spot market from the current $20 million daily level. The business groups said that Colombia should buy as much as $10 billion in the spot market to halt the peso’s surge and build up the central bank’s international reserves. (Darcy Crowe / Dow Jones Newswires)