Category: Colombia

Bancolombia completed the local portion of its planned sale of up to $400m in preferred shares. The company, which is offering 60m shares, placed 21.3m of them locally at COP15,205, raising COP324bn, or $165m. Bancolombia’s investment banking arm sole-ran the deal. The bank will now turn to the ADS market, where it hopes to raise the remaining amount via UBS and Merrill Lynch. Bancolombia, which already has outstanding ADS in New York, is looking even out its balance sheet following a $400m sale of 2017 bonds in May.

Colombia’s ministry of finance has launched an investor relations group that will look to bolster the treasury’s and the government’s efforts to create an open channel with local and foreign holders of the country’s debt. IR Colombia, as it is called, is based on a similar model employed by Brazil, Mexico and Peru, Julio Torres, head of public credit, tells LatinFinance. “We admire very much Brazil’s BEST effort,” says Torres, referring to an initiative headed by a number of Brazil’s market participants including the BM&F, the ANBID, market regulators and public credit offices. The group will have a web site, to be launched in September, that will provide financial data on the country and a team that will answer questions. The initiative was launched at LatinFinance’s Andean Investment Forum, held in Bogotá Tuesday.

Ecopetrol, Colombia’s state-owned oil company, will on August 27 begin to offer its shares to the public in a process that will yield an estimated $2.5bn-$3.0bn in equity. The company is looking to sell up to a 20% stake through an equity offering, part of a larger process to privatize state-owned companies. “A 10% stake would be worth around $2bn or $2.25bn,” Javier Gutiérrez, CEO of Ecopetrol, told LatinFinance on the sidelines of The Andean Investment Forum in Bogotá Tuesday. The offering will take place in three rounds. The first will be offered to stakeholders with special rights, such as labor syndicates, employees and current owners. The second will go to general retail and institutional investors in Colombia, and the third will be offered abroad. Local demand for the securities is estimated at $600m-$900m, according to bankers. The remainder will be offered abroad. Citi and Merrill Lynch have been hired to value the company for the offering, while Credit Suisse and JPMorgan will underwrite the deal, with Bancolombia acting as the local underwriter.

Colombian president Álvaro Uribe, in a keynote speech to the LatinFinance Andean Forum, emphasized the importance his administration is placing on investors. “Investor confidence is very important for us, and we’re more concerned with this than with the year-to year results [of our economy,]” he says. “We want to provide guarantees for the private sector with social inclusion,” he adds, noting gains in tax reductions, regulatory framework, and reforms, all of which he believes led to a pickup in investment. Uribe also said developing a biofuels industry will be a priority for his administration going forward. “We have a great future in biofuels,” he adds. Unlike the US, Colombia has plenty of land available, so it does not have to plant biofuels crops on land used for food production, or jungle.

Colombian TES supply will increase by no more than $2bn net in the coming year, as the country’s ministry of finance looks to give other asset classes more space. “The TES market will grow very little in the next year,” Julio Torres, general director of public credit at the national treasury, tells LatinFinance. “The TES market has been growing a lot, and has been our main source of financing,” Torres says, adding that the idea behind slowing issuance, which is also the bread and butter for the country’s pension funds, is to avoid crowding out infrastructure finance and corporate debt in the pipeline. Colombia will issue around $21bn worth of local currency bonds, mostly domestically, but possibly abroad as well, but that will be largely done to replace the $19bn of TES paper that matures in the next 12 months. So far this year, Colombia has completed 80% of its TES issuance via the sale of $18bn worth of bonds.

Colombia’s government has raised a total of $592m from the sale of state-run generation utility Isagen. It announced on Wednesday that it had secured a further $52m (COP104bn) from the second-round sale of 3.37% of Isagen to add to the $246m (COP488bn) it received from the first-round sale of a 15.85% stake in May. During the first round, only privately owned pension funds, labor unions and company workers were allowed to buy the shares; in the second round, the shares were open to all.

One of Colombia’s largest banks in terms of assets, Banco Davivienda, plans to sell 400bn ($203m) in ordinary bonds following approval by the bank’s board, Davivienda told the securities regulator Wednesday. Davivienda will use the proceeds of the sale for working capital, says the company. Last October Davivienda acquired state-owned Bancafe from the government at auction for $927m.

Following its upgrade of Colombia’s long-term foreign currency IDR to BB+ from BB last week, Fitch Ratings has upgraded the foreign currency Issuer Default Ratings (IDRs) and issue ratings of several Colombian corporates and project finance. Fitch upgraded state-owned oil company Ecopetrol – to BB+ from BB (foreign currency IDR); Isagen to BB+ from BB; and the 9.79% senior secured notes due 2010 of TransGas de Occidente to BB+ from BB.

Moody’s Investors Service has changed its outlook to positive from stable on Colombia’s Ba2 foreign-currency government bond rating, Ba1 foreign-currency bond ceiling, and Ba3 foreign-currency ceiling for deposits. The outlook change reflects the improvement of key debt ratios as a result of the investment-driven recovery in growth and of continued fiscal restraint, said the agency. The outlook for Colombia’s Baa3 local-currency government bond rating is unaffected by the action and remains at stable, added Moody’s. Improved security, greater investment and fiscal consolidation were all factors in the agency’s action, according to vice president and senior analyst Alessandra Alecci.

Colombia’s economy grew by 8% in the first quarter of the year, according to national statistics agency DANE, which published the results on Friday. DANE also announced revised final-quarter figures for 2006, which showed GDP growth of 8.36%, above the preliminary 7.97% result. Private investment was up 32% in the first quarter, said DANE, implying a high quality of growth. The dynamic growth of the economy, however, continues to put upward pressure on consumer prices, which rose to 6.23% for the 12 months through May. Last week the Central Bank raised its benchmark interest rate for the seventh consecutive month, taking it up 25bps to 9%. The Central Bank is targeting inflation of between 3.5% and 4.5% this year.