The purchasing banks are Banco Bilbao Vizcaya Argentaria, S.A. (NYSE: BBVA, BME: BBVA), Banco Santander, S.A. (NYSE: SAN, BME: SAN), BNP Paribas Securities Corp., a subsidiary of BNP Paribas (EPA: BNP), Citigroup Global Markets Inc., a subsidiary of Citigroup Inc. (NYSE: C), Goldman Sachs & Co. LLC, a subsidiary of The Goldman Sachs Group, Inc. (NYSE: GS), and J.P. Morgan Securities plc, a subsidiary of JPMorgan Chase & Co. (NYSE: JPM).

The Tender Offer’s Framework

The offer targets a dozen outstanding series of Colombia’s global bonds with maturities spanning from 2027 to 2061. The purchasers will pay a fixed cash price for each series, plus any accrued and unpaid interest up to the settlement date.

While the offer is for a broad range of securities, the total amount to be paid for the tendered bonds, referred to as the “Maximum Purchase Price,” remains at the sole discretion of the purchasers. If the total value of tendered bonds for any given series exceeds the determined maximum, a proration factor will be applied. This structure provides the syndicate and, by extension, the Republic of Colombia, significant flexibility in managing the scale and scope of the buyback.

The specific bonds and their respective purchase prices per $1,000 of principal amount are detailed below:

Strategic Rationale and Total Return Swap Structure

The offer document explicitly states that the transaction’s primary purpose is for the purchasing banks to acquire the bonds to hedge potential obligations under total return swap (TRS) transactions expected to be executed with the Republic of Colombia.

This arrangement suggests that Colombia is entering into agreements with the banks where it will receive the total return (interest payments plus capital appreciation/depreciation) on its own debt, effectively neutralizing its exposure to those specific bonds. In return, Colombia would likely pay the banks a floating rate, such as SOFR, plus a spread. For the banks to hedge their position in this swap—where they are paying out the bonds’ total return—they must physically hold the underlying assets. This tender offer serves as the mechanism for the banks to acquire the necessary bonds from the market.

This structure allows the Ministry of Finance and Public Credit to synthetically manage its debt profile, potentially reducing interest rate risk or altering its maturity schedule without immediately retiring the debt from its balance sheet. At the maturity of the swaps, the banks are expected to deliver the bonds to the republic, at which point the debt would be formally extinguished.

Key Terms and Timeline for Investors

For bondholders considering the offer, the key dates are as follows:

• Expiration Time: The offer will expire at 5:00 p.m., New York City time, on Wednesday, September 3, 2025. This is also the deadline for withdrawing any tendered bonds.
• Announcement of Results: The purchasers expect to announce the aggregate principal amount of accepted bonds and any proration factors on Thursday, September 4, 2025.
• Settlement Date: The transaction is scheduled to settle on Monday, September 8, 2025.

Tenders must be submitted in principal amounts equal to the minimum authorized denominations, which is $200,000 for most series ($100,000 for the 6.125% bonds due 2041) and integral multiples of $1,000 in excess thereof. The process must be conducted through DTC, Euroclear, or Clearstream.

The offer’s primary condition is the successful execution of the TRS agreements between the purchasers and Colombia. It is important to note that the purchasing banks are severally, not jointly, liable. Each bank is only responsible for its own accepted portion of the tender.

The depositary and information agent for the offer is Global Bondholder Services Corporation.

US Dollars. Photo credit: Mano Chandra Dhas.

The ADRs began trading on the NYSE on July 25, 2024, under the ticker symbol “LTM.” This marks LATAM Airlines Group’s return to the NYSE after its departure in June 2020, which occurred due to a restructuring process under Chapter 11.

As part of the subscription offer, the selling shareholders have granted underwriters a 30-day option to purchase up to an additional 2.85 million ADRs at the initial public offering price. LATAM will not receive any proceeds from the sale of ADRs by the selling shareholders. The offering is expected to close on July 26, 2024, subject to customary closing conditions.

Goldman Sachs & Co. LLC, Barclays Capital Inc., and J.P. Morgan Securities LLC are acting as global coordinators and lead bookrunners for the offering. Citigroup Global Markets Inc., Santander US Capital Markets LLC, Deutsche Bank Securities Inc., BNP Paribas Securities Corp., MUFG Securities Americas Inc., Natixis Securities Americas LLC, and Larraín Vial S.A. are serving as additional bookrunners, with Morgan Stanley & Co. LLC participating as co-manager in the transaction.

The event is the number-one business meetings facilitator for capital markets in Latin America and the Caribbean. Confirmed participants include representatives from a range of of top-end institutions who will share insights on the latest capital markets opportunities, developments and trends across the region, including:

• Ministry of Finance of Ecuador
• National Treasury of Brazil
• Ministry of Economy and Finance of Uruguay
• Bladex
• CAF – Development Bank of Latin America and the Caribbean
• BNP Paribas
• … and many more!

About the Event:
Bonds, Loans & ESG Capital Markets – Latin America & Caribbean Event

Bonds, Loans & ESG Capital Markets – Latin America & Caribbean is the region’s largest and most senior corporate and investment banking event. It is the annual meeting place for more than 500 of the most senior regional and international issuers, borrowers, investors, bankers, advisers and regulators across Latin America and the Caribbean and feature more than 65 expert speakers. With over 87% of the audience being director-level or above, it is a place where live deals are discussed and mandates are won each year.

New for 2023

The Day 2 agenda (on November 28) will be ESG capital markets focused and feature world class ESG speakers. It is open to all attendees and is the only gathering focused on ESG and sustainable finance solutions for the LatAm and Caribbean markets.

The event is your best opportunity to setup valuable 1-2-1 meetings; network; develop new business in LatAm & Caribbean’s capital markets; and institutionalize relationships with existing clients in one place at one time. The expert agenda also shares behind-the-scenes insights from market leaders and enables senior industry decision-makers to discuss important capital markets developments, face-to-face. Regional and international capital markets players in LatAm & Caribbean use this event as a tool to conduct business and shape future financing strategies – making it a “must attend” for all leading CEOs, CFOs, and treasurers.

Highlights of this Year’s Event

You don’t want to miss this opportunity to join 500+ of Latin America and Caribbean’s most senior investment, capital markets, and finance professionals in-person this November.

• Pre-arrange 1-2-1 meetings:
  Use the Bonds & Loans online platform to schedule meetings with other attendees who have created accounts
• Networking Opportunities:
  Access 500+ leading regional & international sovereigns, corporates, investors, banks, law firms, regulators & market practitioners in one location at one time, saving you time and money. Visit our site to see more about our attendees, including Andean Telecom Partners, Saavi Energy, Porto Itapoa, Digital Bridge, and more.
• Accelerate Deals:
  Senior decision-makers (87% director-level or above) from your capital markets clients are attending to move deals along and institutionalize relationships with current partners
• Win new business:
  Your capital markets prospects are there to proactively seek out new business partners
• Gain Expert Market Insights:
  Hear how Latin America & Caribbean’s financial leaders are navigating the current economic climate/share expectations for the future & benchmark

Get Your 10% Discount for Registration

As a Supporting Partner, we have managed to secure a 10% discount for the readers and contacts of Finance Colombia.

To register as a delegate and take advantage of our discount please:

• Register online here

or

• Eontact Isobel Taylor at Isobel.Taylor@GFCMediaGroup.com and mention our unique code: FC10.

For more information about the event, please visit BondsLoansLatam.com or contact Isobel.Taylor@GFCMediaGroup.com.

To view the latest agenda, speakers and companies that attend please download the event brochure here.

Photo: Miami skyline. (Credit: Jorge Tapia / Pixabay)

According to the regional development bank, which is AAA-rated by Moody’s, the transaction will pay a semi-annual coupon of 2.5% and mature on January 18, 2023. It is “priced with a spread of 15.7 basis points over the 2.125% UST due December 31, 2022, which represents a yield of 2.500% s.a.,” said the IDB in a statement.

Orders exceeded $5.2 billion USD from more than 100 investors, which were distributed across the Americas (39% of the investors); Asia and the Pacific (22%); and Europe, Africa, and the Middle East (39%).

As for the types of investors, 48% are banks, 36% are central banks (and other “official institutions”), 13% are asset managers, and the remaining 3% are a collection of pension funds, insurance companies, and corporate investors.

“We usually issue $3 billion USD benchmarks in this maturity and so we are very pleased with the result,” said Laura Fan, head of funding at the IDB.

The joint lead managers are Bank of America Merrill Lynch, BMO Capital Markets, RBC Capital Markets, and TD Securities. The co-lead managers are BNP Paribas, Citibank, Deutsche, Goldman, HSBC, JPM, Mizuho, Nomura, NatWest, and Wells Fargo.

Fen added that the “typical strong demand in January” for the bond issuance made it particularly significant in a number of ways. “It is our largest five-year primary U.S. dollar global benchmark, our largest five-year order book, and a record number of investors for a five-year bond,” she said.

The financing, characterized as a “senior unsecured A/B loan package,” will be coordinated through the development bank’s IDB Invest arm and allow EPM to build a 2,400-megawatt hydropower plant in northern Antioquia, the nation’s largest department outside the capital.

Once completed by the Medellín-based utility, the facility is expected to generate some 13,900 megawatts of electricity per year, or 18% of the total power capacity in a country where the vast majority of electricity is generated through hydropower.

The initial $300 million USD “A” loan will come from the IDB Group with a 12-year tenor. Another $650 million USD, with a 12-year and 8-year tranche, will come from a group of international banks and investors, including BBVA, Banco Santander, BNP Paribas, KFW IPEX, Sumitomo Mitsui Banking Corporation, CDPQ, and ICBC.

The remaining $50 million USD will come from the China Co-Financing Fund for Latin America and the Caribbean, which is administered by the Inter-American Development Bank.

“The transaction highlights the expansion of renewable energy in emerging markets and underscores IDB Invest’s commitment to mitigating climate change,” said the IDB in a statement.

Photo credit: Empresas Públicas de Medellín (EPM)

Above photo: Termocandelaria power plant in Cartagena

Tribeca invested in Termocandelaria in 2009 and Termobarranquilla in 2010. With an aggressive strategy of upgrading operations and efficiency improvements, this sale generated a 220% return on capital and a gross internal rate of return of 17% annually. With its 60.75% stake, Tribeca indirectly controlled the largest thermal energy portfolio in Colombia.

“This is our third successful exit this year, with which we have returned a total of $452 million USD to investors since 2007,” said Luc Gerard, Tribeca’s founder and CEO.

Termobarranquilla and Termocandelaria represent 13% of Colombia’s thermal and hydroelectric power capacity, and 27% of the thermal capacity. The largest, and one of the most efficient thermoelectric plants in the country, Termobarranquilla has a 918 megawatt capacity and produces approximately 40% of the energy needs of Colombia’s Atlantic Coast. Acting as a supplement, Termocandelaria generates 314 megawatts.

Tribeca is a private equity fund with approximately $400 million under management and a portfolio of 12 companies in infrastructure, health, natural resources, energy, and consumer goods. BNP Paribas and Banicol served as advisors on this sale.

Through various panels and keynote addresses by Argos Group, Ministry of Finance and Public Credit of Colombia, The Colombia Stock Exchange, Invesco among other experts, will discuss strategies for global growth; attract more foreign direct investment in the Andean region and development of financial assets in Colombia in the coming years.

“Given the growing demand for infrastructure investment and development in Latin America and the critical need for greater access to capital in the region to support this growth, Bonds & Loans conferences stand out among their competitors not only for the scope and diversity of his subjects, but for the quality of its content. SMBC expects continuously participate in these conferences with key leaders in the industry,” said Carlos Adams, of SMBC.

The event is sponsored by major global financial institutions including: BNP Paribas, Mitsubishi UFJ Financial Group (MUFG), la banca corporativa y de inversión del Grupo Itaú, Grupo Sura, HSBC, Baker & McKenzie, Citi, Fitch Ratings, SMCB, Brigard & Urrutia, Chadbourne, GIT, Posse Herrera Ruiz, Standard & Poor’s Rating Services More than 300 people have already confirmed their participation including issuing institutions, government, institutional investors and specialised consulting firms , such as: Loomis, Sayles & Company, Invesco, , MBS Value Partners, BBVA Bancomer Asset Management, Empresas Publicas de Medellin, Alicorp, Grupo Sura, CENIT, AFP Profuturo, AFP Skandia, Rimac Seguros, International Finance Corporation, Findeter, Colcapital.

View the full attendee list here: www.bondsandloansandes.com Contact Marcia Ardila to find out more and to register your place: Marcia.Ardila@GFCConferences.com or visit the website: www.bondsandloansandes.com

Finance Colombia newsletter subscribers receive a discount of 20%, so be sure to subscribe for free here, then register for the symposium using the code FC20