Colombia Says Global TES Well Through Dollars

Colombia raised $800m-equivalent in global 2021 peso TES bonds at a cost much cheaper than dollars or local market options, Patricia Moreno, the sovereign’s deputy director for international capital markets, tells LatinFinance. She points out that the bonds priced 82bp through the domestic TES curve, and that the indicative swap rate was 35bp below 3-month Libor. This equates to 3.5% equivalent fixed, says a banker familiar with the trade, adding that investors were buying FX and local rates upside. Moreno compares the price to what Colombia pays on its global USD 2019 – the closest liquid reference – which is equivalent to 3-month Libor plus 136bp. “We are committed to this market again,” Moreno says. “We saw there was an appetite, and this gives us another alternative to consider in the future,” she adds. Moreno says Colombia witnessed increased demand for its bonds in the last 2-3 months of 2009, followed by increased demand in the local markets, and renewed interest in a global peso issue. The sovereign has exceeded its $500m borrowing needs for 2010, with the extra $300m going to offset multilateral funding. Moreno says Colombia may consider pre-financing for 2011 later this year, once the new government is in place and budget plans are set. Colombia sold COP1.53trn of the 2021 bonds at par with a 7.75% coupon Wednesday. The price paid on the global TES would suggest that this market is extremely attractive to other LatAm sovereigns. However only a handful – including Peru, Brazil and Uruguay – would be likely to tap, say DCM bankers.