The Colombian market has yet to recover its pre-pandemic deal volume – but that hasn’t stopped a series of landmark transactions coming out of the country.
Over the past year, JP Morgan – which wins Investment Bank of the Year in Colombia – has played a key role in some of the most outstanding of them.
The bulk of its activity centered on transactions that themselves reflect current trends in the Colombian market, says Moises Mainster, the senior country officer Andean, Central America, and the Caribbean at JP Morgan.
He says that deal activity has been led mainly by financial institutions and companies in the infrastructure and energy sectors, while the sovereign has also been active, in line with historical norms.
But he points out that the domestic interest rate environment has put a damper on local capital markets, while the bank market has amply compensated. “We are seeing increased liquidity from local banks making loans more competitive than capital markets,” he says. “Colombian issuers have had limited appetite to raise capital in local markets given still high interest rates and the size constraints in local markets.”
Cross-border activity by Colombian issuers has been driven mainly by refinancing of upcoming maturities and also by project financing in the infrastructure space, he says.
“Issuances have been mainly driven by the refinancing of upcoming maturities mainly via traditional bond structures and project finance to fund initiatives in the infrastructure sector,” he says. “In the financial institutions sector we have seen Tier 2 issuances.”
JP Morgan acted as financial advisor to Cementos Argos on the combination between its subsidiary Argos North America and Summit Materials. It played a similar role for Grupo Argos on the exchange of its investment in Grupo Nutresa’s food business for shares of Grupo Sura and Grupo Argos – a complex deal that had important repercussions for the country’s corporate sector.
The bank led the issuance of $425 million in senior unsecured bonds by Termocandelaria Power in September, and the $800 million subordinated Tier 2 notes transaction placed by Bancolombia in June.
Mainster adds that, on the equities front, valuations for Latin America and Colombia remain below historical levels which has limited the appeal of raising equity capital. His expectations for 2025 are similar to the year just passed.
“We expect bond market activity to continue focused on refinancing upcoming maturities and project finance, with potential to finance corporate capex and acquisitions if economic activity and deal activity picks up,” he says.
“In M&A, a lower interest rate environment often leads to increased deal activity. We are seeing continued interest in international diversification and some corporates thinking about strategic portfolio management.”