The Colombian government plans to tap the capital markets through a reopening of its peso-denominated global bonds maturing in 2021, according to a filing with the U.S. Securities and Exchange Commission.
The size of the transaction was not noted in the regulatory filing but adds to the $800 million-equivalent bond offer the country completed in April. The securities mature April 2021 and are payable in U.S. dollars.
Bank of America Merrill Lynch and Deutsche Bank Securities are joint managers of the sale.
The offering comes as optimism rises around Colombia as investors and analysts expect that the market-friendly policies of the outgoing Alvaro Uribe administration advance under President-elect Juan Manuel Santos.
Last week, Standard and Poor’s Ratings Services revised Colombia’s foreign-currency outlook to positive from stable, widely seen as a precursor to a credit-rating upgrade that would bring the country back to investment grade for the first time in nearly a decade.
Colombian Finance Minister Oscar Ivan Zuluaga said earlier this month that the government plans to increase its borrowing on local and international markets by about $2 billion to replace revenue from privatizations that were scheduled for this year.
The government will borrow $500 million through an international bond issue, $500 million from multilateral lenders and 2 trillion Colombian pesos ($1.06 billion) in local bond issues to replace about COP4.5 trillion expected to be raised in privatizations, Zuluaga said.
The government had anticipated raising at least COP3 trillion from the sale of its controlling stake in power generation company Isagen SA ESP (ISAGEN.BO), COP1 trillion from the sale of regional electricity utilities and COP500 billion from other assets.
Juan Carlos Echeverry, who will be appointed finance minister in August when president-elect Juan Manuel Santos assumes the presidency, said the next administration doesn’t plan to sell Isagen.
In the April transaction, the bonds were priced at par with a yield of 7.75%, or 389 basis points over comparable U.S. Treasurys.
(Kejal Vyas, Dow Jones Newswires)