Colombian trading of private debt surged last year as companies cut off from international financing by the worldwide credit crunch issued a record amount of local bonds, data from the main securities exchange show.
Bolsa de Valores de Colombia SA’s corporate bond trading volume rose 48% to COP115 trillion (US$58.5 billion) in 2009 from COP77.7 trillion the previous year, according to exchange data sent by e-mail. Companies sold COP13.4 trillion in debt last year in Colombia, compared to COP5.68 trillion in 2008, according to a report on the bourse’s Web site.
The global recession spurred local companies to look domestically for financing as credit dried up among international lenders, said Andres Jimenez, head analyst at Interbolsa SA in Medellin. At the same time, Colombian investors repatriated money after perceiving new risk in U.S. banks, he said.
“You had a situation in which the market became more liquid than necessary and the flow had to go somewhere,” Jimenez said. “Everybody and their mother started issuing here.”
After companies such as Cementos Argos SA, Colombia’s biggest cement maker, and Grupo Aval SA, the country’s biggest financial holding company, sold bonds last year, smaller companies may seek in 2010 to take advantage of low interest rates and high demand to sell debt, according to Jimenez.
Cut the Rate
The central bank cut its benchmark interest rate nine times in a year to a record low of 3.5% in November in a bid to speed a sluggish economic recovery. Demand for corporate bonds was more than double the supply last year, according to bourse data.
“This year is going to be very familiar, we’re not going to see interest rates rising much,” Jimenez said. “We’re going to see small caps coming into the market. There are interesting possibilities and prospects for the amount of revenue this can add to the local exchange.”
Shares of BVC, as the exchange is known, fell 0.7% to COP28.7 at 10:28AM New York time in Bogota trading.