The event is the most senior corporate and investment banking event focused on institutional debt in Latin America and The Caribbean. As usual, Finance Colombia was in attendance. This year’s event took place at The Ritz Carlton Coconut Grove in Miami.

Feedback on the event has been very positive. Baruc Saez of Itaú bank said to “share views, hear opinions and exchange ideas with other banks, issuers, rating agencies and investor. I think it’s a great forum – it is not very often we go to an event where you meet so many different players and participants. It is the only one in the region where we can go and meet the issuers, rating agencies and the investors in a very open dialogue.”

412 professionals attended the event this year representing 186 companies from 32 different countries and territories. A date for next years event has not yet been made public, but interested attendees and exhibitors can contact GFC Media here.

“With the purpose of achieving the democratization of access to land, for the benefit of rural citizens and especially  those with insufficient land, the national government will create a land fund for free distribution,” stated the peace agreement.

The indigenous, rural, and Afro-Colombian families who lack land, do not have enough land to make it productive, or do not have titles to the land they occupy or live on will receive these lands, which will be purchased from the ranchers; they will also be required to cultivate and produce food on these lands. All these land access, usage, and distribution concerns are covered in the chapter on integral rural reform. This is what is currently being promoted as agrarian reform by President Petro’s administration.

Petro said that the “development agency authorities must cease encouraging massive cattle farming and produce two objectives:” The first goal is to make agricultural appeals that encourage the production of agriculture, with “agrarian reform being one of the approaches.”

The meeting between Lafurie and Petro is notable because Lafurie’s wife is Senator Maria Fernanda Cabal from Alvaro Uribe’s Centro Democrático party, and perhaps the most outspoken opponent of President Petro.

100 million dollar loan

The second goal is to stimulate property ownership. The state says it won’t make any proposals to purchase any land; instead, it will wait for each farmer to make a bid. According to the agreement reached between the government and Fedegan, payments for the land will be made through “public debt bonds” and other means that the government will designate – and still has to determine. Actually, Colombia’s public debt would rise as a result of this policy.

All of this occurs as part of Petro’s intention to quicken rural transformation and take on the debt of 60 billion pesos required to buy these lands. In an interview for Noticias Caracol, the President said that the funding strategy for purchasing land will be “for 20 million pesos each, that is 60 billion pesos. We can think about the money over six years, at 10 billion pesos per year, we get into debt and pay the landowner with titles.”

To finance this plan, the Petro administration asked foreign creditors for $100 million USD, said the Minister of Agriculture, Cecilia López, to El Colombiano. She clarified that the credit, which would be issued by the UN’s Green Climate Change Fund, will be used to buy property as well as carry out constructive initiatives. “It is one of the largest loans in Latin America for sustainable agriculture. Part of that money is non-repayable,” she stated.

One potential funder could be the United States. When some US congressmen visited Bogotá in October and warned the government against a closer relationship with China, Petro’s administration responded that increasing Washington’s collaboration with Colombia is one strategy to stop China’s infiltration, according to El País. Petro hopes to persuade President Joe Biden to provide funding for the Colombian government to buy property from ranchers so that it may be transferred to landless rural citizens.

Petro also recently met with the heads of major financial institutions in Colombia, including Itaú, Colpatria, Bancolombia, BBVA, Davivienda, as well as large companies like Nutresa and Grupo Corona, among others. Infobae reported that Gustavo Petro suggested to private banks funding the nation’s agricultural production. “I invite you, if we co-finance agrarian production, the great reform in the financial world is that finance should finance production. It is not even whether it has more competitiveness, which is a big discussion in Colombia, if they finance the production,” commented the president.

Lastly, Petro seems to be hoping to count on Banco Agrario to fund his intentions. He told Hernando Chica Zuccardi, President of the bank, that the institution “has become vital for us”. “We have promised to capitalize the largest and most modern bank in Colombia,” Petro said in a report disclosed by Valora Analitik. “Here we need a lot of knowledge. SENA has to become almost a rural SENA. This is with knowledge, this is with credit and this is with land,” added the president.

The distribution has already started

At the end of October, Gustavo Petro reportedly said that the agricultural reform has already started as part of the distribution of land for peace to 50 peasant families in Monteria, according Valora Analitik. “The first thing I would have to say is that this first day of this agrarian reform process has to gather such speed that, when we reach the last day of government, we will be at the maximum,” said Petro.

He also told Cecilia Lopez, the minister of agriculture, that his final day in office as president should be spent “delivering land.” “Here we come to propose a pact and we can find the obstacles around what has happened in the background to deliver this farm,” said the Petro..

On the other hand, in recent days, officials have also communicated that two other proposals have been received, each of 800 hectares, and “show that there is an intention in the country to move forward with the reform.” They also indicated that the purchase of three million hectares in four years is virtually impossible and that, therefore, the greatest aspiration is to leave the legal framework in place so that the next governments can carry out this task; a risk that Cecilia López already hinted at when she revealed the 100-million-dollar credit earlier in October. She explained the government could only purchase approximately 500,000 hectares a year, or half of what Fedegán is proposing by 2026, which suggests that this policy must be maintained by the following administration.

“What we are trying to do is to leave such a successful and efficient model that the next government, whoever it may be, will sustain it,” said Lopez. “The country must ask for it and, therefore, we have to be successful so that this policy continues and that the agrarian reform, which has already begun, really becomes a reality in Colombia.”

Above photo: President Gustavo Petro (left) and José Felix Lafurie, president of Fedegan (Twitter)

“The only credit markets event for the Andean region”

200+ Senior Attendees | 25+ Expert Speakers | 100+ Sovereign, Corporate & FI Borrowers

There has never been a more important time to bring together 200+ of the Andean region’s most senior issuers, investors, bankers, rating agencies and lawyers to share knowledge, debate and network.

This unique virtual platform will bring together the leaders in the Andean capital markets community – with over 81% of the audience being director-level or above – making it a “must attend”. The event is taking place online this year, meaning that participants are able to connect with even more C-level decision-makers that they would at a physical conference in less time.

The event will bring buyers and sellers together to conduct business and shape future financing strategies; enable you to initiate an unlimited number of new business connections via the networking directory; deliver behind-the-scenes insights from global financial leaders who will answer your questions; and provide a bird’s eye view of the Andean market.

Highlights for the 2021 event:

• Understand the region’s key macro drivers which shape both sovereign and corporate debt strategies for 2021/22
• Bringing international and local investors together with Andean issuers to define and analyse the roadmap for raising capital in 2021
• Connecting recent issuers with Andean financial institutions and government bodies to understand financing needs and identify new business opportunities
• Access 200+ of the most senior regional and international issuers, investors, bankers, rating agencies and lawyers at one time
• Setup an unlimited number of virtual meetings with participants from the Andean capital markets community via our 1-2-1 networking platform
• Gain exclusive behind-the-scenes insights from the 25+ regional and international credit market leaders speaking on our expert-led panels

The entire market will be present. Use your market’s best attended event to re-engage with your existing clients, build strong business relations with your prospects and hear the region’s financial leaders speak on how they are navigating the current economic climate/share their expectations for the future.

Register online here – enter our 10% discount code FC10

Enquiries: contact Jessica Wheater on Jessica.Wheater@GFCMediaGroup.com

Visit www.BONDSANDLOANSANDES.com to view the latest brochure, agenda, speakers and companies that participate.

Sponsored Content

The event is taking place online this year, meaning that participants are able to connect with even more C-level decision-makers that they would at a physical conference in less time.

About Bonds & Loans Andes Virtual: With global travel restrictions still in place, we have received unprecedented demand from our Andean clients to provide a platform in which the community can come together, do business, and show their commitment to the market during these uncertain times. Join senior decision-makers from 200+ of the region’s leading issuers, investors, bankers, rating agencies and lawyers to share knowledge, debate and network.

With over 81% of the audience being director-level or above, it is a place where buyers and sellers will come together to conduct business and shape future financing strategies; enable you to initiate an unlimited number of new business connections via the networking directory; deliver behind-the-scenes insights from over 25 global financial leader speakers who will answer your questions; and provide a bird’s eye view of the Andean market.

Don’t miss this opportunity to join over 200 of the Andean region’s most senior investment, capital markets and finance professionals. Register online here or contact Jessica Wheater on Jessica.Wheater@GFCMediaGroup.com – use our 10% partner discount code FC10.

Visit www.BONDSANDLOANSANDES.com for more information.

GFC Media Group Press/Marketing Contact (Organizer): Jessica Wheater, Head of marketing – Bonds & Loans Andes, GFC Media Group. Tel: +44(0)20 7045 0910 / Email: Jessica.Wheater@GFCMediaGroup.com

Following consummation of the offer. $354,074,000,000 COP aggregate principal amount of the notes are expected to remain outstanding.

Announcement of Final Tender Results

The following table summarizes the final tender results as of 5:00 p.m., New York City time, on December 2, 2019 and the principal amount of Notes that ETB has accepted for purchase:

According to the information provided by tender agent D.F. King & Co., a total of $1,186,000,000 COP aggregate principal amount of notes had been validly tendered after the early tender date and on or prior to the expiration date, and a total of $176,106,000,000 COP aggregate principal amount of notes had been validly tendered from November 1, 2019 to the expiration date.

Holders of notes validly tendered after the early tender date and on or prior the expiration date and that are accepted for purchase pursuant to the offer, subject to the maximum tender amount and proration, are eligible to receive the expiration consideration of 975 COP per 1,000 COP principal amount of notes tendered. The expiration consideration will be payable in U.S. dollars and converted at COP $3,522.48 per U.S.$1.00, the representative market rate (tasa representativa del mercado) for the purchase of U.S. dollars with Colombian pesos as calculated and published by the Superintendence of Finance of Colombia (Superintendencia Financiera de Colombia) at the end of November 29, 2019, the business day prior to the expiration date. Notes validly tendered and accepted for purchase after the early tender Date and on or prior to the expiration date were expected to be purchased on December 6, 2019, which is the fourth business day following the expiration date, subject to the terms and conditions described in the Offer to Purchase. In addition, holders whose notes are accepted for purchase will also be paid accrued and unpaid interest from, and including, the last interest payment date up to, but not including, the Final Settlement Date.

Itau BBA USA Securities, Inc. acted as dealer manager for the offer.

Itaú Colombia established operations in Colombia in 2012 as part of the regional expansion strategy of its parent, Banco Itaú Corpbanca (formerly Corpbanca). This strategy was complemented by Banco Itaú Corpbanca’s integration with its ultimate parent in Brazil. The Colombian franchise has already benefited from Itaú Group’s strong risk management culture and adoption of the Itaú brand. It should see additional benefits once the business model in Colombia is completed.

Key Ratings DriversVR and IDRS

Itaú Colombia’s LT Local and Foreign Currency IDRs are driven by its ‘bbb-‘ Viability Rating(VR). The bank’s VR is highly influenced by its company profile and resilient asset quality. Itaú Colombia’s ratings also consider its tight capital levels, weak profitability, sound risk management,as well as its strong liquidity management in line with Colombian market and Basel 3 internal considerations.The affirmation reflects Itaú Colombia’s stabilized asset quality trends and sustained capital metrics despite a challenging economic cycle in Colombia. The bank has also continued worked extensively to implement its Brazil-based parent’s expansion strategy. Itaú Colombia’s ratings are higher than those implied by the potential for support from its ultimate parent (Itaú Unibanco Holding, BB/Stable) in consideration of its own intrinsic credit profile, given Colombia’s stronger operating environment relative to Brazil’s.

Fitch has affirmed the following ratings:

• Long-Term Foreign and Local Currency IDR at ‘BBB-‘; Outlook Stable
• Short-Term Foreign and Local Currency IDR at ‘F3’;
• Viability rating at ‘bbb-‘;
• Support Rating at ‘3’;
• Support Rating Floor at ‘BB+’;

The Colombian market experienced lingering systemic asset deterioration during 2018, but Itaú Colombia’s asset quality leveled off ahead of its local peers and is showing signs of improvement. Impairment loans ratio fluctuated between 2.9% and 3.1% during 2018 in contrast with the Colombian banking system, which reached 3.7% at September 2018. The focus on implementing Itaú’s commercial and retail strategy for its loan portfolio narrowed its asset growth. The legacy of corporate loans in difficulties continues to explain part of its asset deterioration. By segment, the corporate portfolio deteriorated 30 bps versus the system’s 100 bps asset deterioration; the retail portfolio improved its asset quality in 110 bps as the systems improved in 60 bps, while mortgage deterioration of 80 bps was above the 20 bps of the banking system.

Itaú Colombia’s profitability has been low as it adapts to the new business model and a low economic cycle. Pressures on loan impairment charges, technological integration, brand launch and strategic adjustments constrained operational revenues generated during the last three years. Fitch expects Itaú’s profitability to gradually improve in the coming years, while the bank further supports the parent’s revenue and geographic diversification strategy. Operating profit to risk weighted assets remains weak at -0.2% as of September 2018. This was well below regional peers at 1.75% for the same period and below the average of the last two years of 0.26%.

Fitch views the bank’s capital as relatively tight, although there is some comfort when considering its ample loan loss reserves, good asset quality and sound risk management. Its current capitalization metrics are lower than those of similarly rated peers (universal commercial banks in a ‘bbb’ operating environment), and Fitch considers this one of the constraints on the bank’s VR. The bank’s Fitch Core Capital (FCC) ratio was 9.64% at September 2018, underpinned by asset value decrease and net income losses.

The bank maintains good liquidity levels that provide some relief from managing the concentrated liability structure. The moderate franchise gives a limited competitive advantage and generally influences funding costs. However, the deposit structure is working toward a composition of stable resources, in line with the more conservative liquidity policies and liquidity coverage ratios; this includes mid- to long-term time deposits, domestic and overseas bond issuances, and increased retail funding.

Support Rating & Support Rating Floor

The bank’s Support Rating (SR) of ‘3’ and Support Rating Floor (SRF) of ‘BB+’ are driven by its moderate systemic importance and its growing share of retail deposits, although this is still modest when compared to domestic systemically important banks. Fitch believes that there is some probability that the bank would receive sovereign support if needed, and this underpins its SR and SRF. SRFs indicate the minimum level to which the entity’s LT IDRs could fall as long as Fitch does not change its view on potential sovereign support.

Rating Sensitivities VR and IDRS

Upside potential for Itaú Colombia’s ratings is limited over the short to medium term, given its moderate-size franchise and low profitability. Negative rating action could arise from a material further deterioration in asset quality that erodes the bank’s FCC ratio, profitability or loan reserve coverage of impaired loans (to below 9% or 100%, respectively).

Additionally, although Fitch considers the subsidiary’s credit profile to be mostly independent from that of its ultimate parent, the VR and IDRs may be pressured in a scenario of further downgrades of Itaú Unibanco Holding (BB/Stable), because, under Fitch’s criteria, the intrinsic credit profile of a subsidiary bank cannot be completely delinked from that of its parent. Considering the stable outlook on the parent, Fitch does not consider this as a likely scenario in the foreseeable future.

Support Rating & Support Rating Floor

Upside potential for the SR and SRF is limited and can only occur over time with a material gain of the bank’s systemic importance. Upside potential on the SR could also occur over time from a material improvement of the parent company’s ratings. These ratings could be downgraded if the bank loses material market share in terms of retail customer deposits.

Additionally Fitch has withdrawn the following ratings for commercial reasons:

• National long term rating at ‘AA+(col)’; Outlook Stable
• National short-term rating at ‘F1+(col)’;
• Senior unsecured national bonds at ‘AA+(col)’;
• Subordinated national bonds at ‘AA(col)’.

In addition to collateral benefits, the funds “will be used to provide letters of credit to fund exploration and transportation commitments in Colombia and Peru,” said the Toronto-based company in a statement.

Frontera Energy said that this line of credit, which has an initial term of eight months as a secured credit facility, is being used to replace Frontera’s current secured letter of credit, which includes $81.9 million USD of used capacity that will mature on June 22.

Following the initial eight months, the term of the credit facility is expected to be extended to two years “upon satisfaction of certain extension conditions,” according to Frontera Energy. The provision of the new arrangement will thereby “allow Frontera to release collateral and reduce the company’s cost of funds,” stated the firm.

“During the initial term, the credit facility will have substantially the same security, covenants, and events of defaults as the [current facility] and the company’s senior secured notes due 2021,” added Frontera. “Upon satisfaction of the extension conditions, the credit facility will become an unsecured facility and the guarantors under the credit facility will be limited to the Company’s principal subsidiaries.”

READ MORE: Frontera Energy Sees Year-Over-Year Production and Sales Declines in First Quarter

The new credit facility has been arranged by Itaú Corpbanca Colombia S.A., Citibank N.A., JPMorgan Chase Bank N.A., HSBC Mexico S.A., Institución de Banca Multiple, Grupo Financiero HSBC, and Bank of America Merrill Lynch.

While the company, which has operated as an oil producer Colombia for decades, previously under the name Pacific Rubiales, has emerged from the worst of its financial and operational difficulties of recent years, challenges remain to improving its financial results.

In the first quarter of 2018, with $249.5 million USD in sales and a net loss of $3.1 million USD, it saw year-over-year declines in both profitability and oil production (which fell by around 5,000 barrels per day compared to the first quarter of 2017).

“The new facility further strengthens our balance sheet, credit profile and long-term access to capital,” said David Dyck, chief financial officer of Frontera Energy. “This gives us great confidence as we continue to position ourselves for growth in 2018.”

Even with Colombia’s falling peso and petroleum based drag on the economy, it is considered a good bet, especially compared to many neighbors in Latin America. Swiss UBS is said to be moving into the market, though bank officials would not comment on plans, and US based JP Morgan is said to be increasing its current investment banking workforce in Bogotá.

«Itaú Paulista». Publicado bajo la licencia CC BY-SA 2.0 vía Wikimedia Commons – https://commons.wikimedia.org/wiki/File:Ita%C3%BA_Paulista.jpg#mediaviewer/File:Ita%C3%BA_Paulista.jpg.