Category: Colombia

Colombian electricity provider Transelca, owned by state-controlled electricity distributor Interconexión Eléctrica SA (ISA), is to issue bonds worth up to 150 billion pesos or the equivalent in dollars ($69 million) to be placed either in the domestic market or in international markets. ISA took control of Transelca, which serves Colombia’s Atlantic coast, earlier this year after exchanging Ecopetrol’s 34.99% holding for a 5.78% stake in its capital. ISA was partially privatized in 2000 and has become a key regional player in the sector, expanding into Panama, Peru, Ecuador, Bolivia and Brazil.

Meanwhile, Colombia’s Central Bank raised its benchmark overnight lending rate by 25 basis points to 8.25%, in line with market expectations. Accelerating growth and rising prices have prompted the monetary authorities to raise interest rates from 7.50% since the end of last year and up from 6% as at April last year.
Figures released on Friday by national statistics agency DANE showed economic growth accelerated to 7.97% in the final quarter of the year from 7.7% in the third quarter and from 5.41% in the first quarter. Growth for the year was 6.80% compared with 4.72% in 2005.

Colombia plans to continue extending its local yield curve with a new peso-denominated 20-year benchmark Treasury bond (TES). The finance ministry said it plans to issue the new paper by the middle of this year. The new 2027 bond would replace the current longest fixed-rate TES paper, maturing in 2020. The longest inflation-linked TES, launched earlier this year, matures in 2023. The ministry said there may also be demand for a 30-year bond further down the line.

Colombia’s government Thursday said it hopes to start selling off a 20% stake in the country’s largest company, state-run oil concern Ecopetrol, at the end of August. The sale is set to become the largest privatizations yet by Alvaro Uribe’s administration, with analysts estimating revenue of around $3 billion from the sale. The money raised will be used to fund exploration and increase production. Ecopetrol is looking to mandate two investment banks in the second half of April to prepare the sale.

Colombia has moved closer to securing an investment-grade rating after Standard & Poor’s raised its long-term foreign currency sovereign credit rating on the Republic to BB+ from BB, just one notch below the level needed. “The upgrade is supported by Colombia’s significantly improved growth prospects and fiscal performance,” said S&P credit analyst Richard Francis. Nevertheless, the ratings agency emphasized the need for further tax and pension reform to improve the government’s fiscal prospects and lighten the debt burden, which would in turn lead to higher creditworthiness. It warned that “significant fiscal slippage or a sharp deterioration in national security” could, in contrast, have the opposite affect. US investment house Goldman Sachs, commenting on the upgrade, felt the ratings action was earned and thought that “consolidating and deepening the fiscal adjustment should remain the top priority for Uribe’s second presidential term”. It added that progress in this area could lead to an upgrade from Fitch in the “immediate future”, as well as Moody’s. Goldman concluded that Colombia could reasonably expect to achieve investment grade status “towards the end of 2008 or beginning of 2009”.

Colombian food company Colombina is to issue longer-term debt to extend its debt profile. Colombina hopes to raise around $22.3 million (50 billion pesos) in local-currency, 10-year bonds, said the company. The securities will pay a maximum of the inflation index plus a spread of 6.10 percentage points, reported Dow Jones. Corficolombiana structured the deal.

Panamanian Multi Credit Bank has agreed to buy a 70% controlling stake in Colombian financing house Macrofinanciera. The deal between the local Castellanos family, which owns 100% of Macrofinanciera, and Multi Credit Bank is expected to be finalized by the end of May. No financial details were offered. Macrofinanciera has assets totaling $15.4 million (34.4 billion pesos).

Colombia’s inflation gathered pace in February, with prices rising 1.17% during the month, according to national statistics bureau DANE. February’s prices took inflation for the 12 months through February to 5.25%, overshooting the government’s 4%-5% target range. Education costs drove the hike in prices, rising 3.94% in the month.

Alberto Carrasquilla, Colombia’s finance minister, will step down on March 7 according to a statement by the finance ministry. Oscar Iván Zuluaga, currently presidential advisor to President Alvaro Uribe, will take over as the new finance minister on March 8 or 9. Alberto Carrasquilla, who became finance minister in 2003, tendered his resignation last month for personal reasons.

Colombia’s largest cement-maker, Cementos Argos, owned by local conglomerate GEA, sold $67.6 million worth (150 billion pesos) of local bonds on Friday at a yield of inflation plus 5.25 percentage points. Proceeds raised from the sale of the 10-year peso-denominated bonds will be used to replace shorter-term local currency debt, as well as for working capital. The offering is part of a debt program approved in September 2005 to sell up to 600 billion pesos of bonds. The company sold bonds worth 450 billion pesos last November.