President Santos Lauds $1 Billion Dollar (US) Bond Placement, Global Investor Confidence in Colombian Economy

March 24, 2015

The President of Colombia, Juan Manuel Santos, said today that Colombia successfully placed a new $1 billion (USD) bond issue on the global debt market yesterday, demonstrating the world’s confidence in the soundness of the Colombian economy.

“We placed a billion dollars at less than the interest rate the government received in January,” said the President, during the Agenda Colombia program.

Santos said that this issue demonstrates international confidence in the Colombian economy, despite falling oil prices.

The Colombian debt issue, placed by Deutsche Bank Securities Inc., HSBC Securities (USA) Inc. and Itau BBA USA Securities, Inc., was purchased by investors in the United States, Europe, Latin America and Asia.

The President explained that “we are paying less than what we were charged in January, meaning that there is more confidence despite all the problems we’ve seen in the neighborhood with the drop in oil prices.” President Santos acknowledged that the “bajonazo” (great fall) in oil prices has affected the country. “But however you take the projections of the Colombian economy, we suggest that (global) markets are increasingly believing in Colombia.”

“It turns out that the issue yesterday was surprising, because I thought the interest rate would be a little higher since the situation has not been easy; So there is a lot of confidence,” said Santos.

International confidence

The sovereign 30 year long bond issue, maturing in June 2045, was conducted by Minhacienda, Colombia’s Ministry of Finance,through the General Directorate of Public Credit and National Treasury. These bonds, explained Minhacienda, were placed at a yield of 5.041%, brings the total amount raised to $2.5 billion (USD) in this series of debt financing. The total demand was for $4.9 billion, almost 100% oversubscribed.

236 institutional investors participated in this issuance. The largest number for any sovereign long bond issuance in Colombian history.
This issue has the lowest coupon achieved by the Republic of Colombia in its history of 30 year bond issuances.

Finance Minister Mauricio Cardenas said “The result of the operation is very successful. The big appetite of international investors for Colombian bonds reflects confidence in the institutions and economic policies of the country. It is a recognition of the flexibility that Colombia has to adapt to uncertain international conditions,” said Finance Minister Mauricio Cardenas. “Achieving a lower rate on the bonds than the ones issued in January (5.06%) reflects the fact that confidence in the Colombian economy has been growing,” a situation that generated due to “international markets rewarding the responsible day to day management of public finances in an environment of low inflation and soundness of the financial system.”