Category: Colombia

Colombia’s President Alvaro Uribe has cemented his position with a majority win by his supporters in Sunday’s Congressional elections. The main pro-Uribe parties won 62% of the seats in the Senate and 56% of the lower house, better than had been forecast by local pundits. The polls on Sunday are widely seen as an indication of how voting will go on May 28, when presidential elections are slated to take place. Uribe, who amended the constitution to allow for it, is standing for a second four-year term as president of Colombia. He has enjoyed the greatest public support of any leader in Colombia’s history, usually polling between 53% and 70% of the vote, largely as a result of a reduction in violence in the country since he took office.

Two local bidders for Colombia’s state-owned fixed-line company, Colombia Telecom, have said they are withdrawing from the process. Empresa de Telecomunicaciones de Bogotá and Empresas Públicas de Medellín (EPM), the largest public services provider in Colombia, said they were unable to make a “serious and reasonable offer” for Colombia Telecom in the face of competition from foreign firms such as Mexico’s Telmex, Telefónica de España and Venezuela’s CANTV. The only local bidder left in the running is cable provider Cablecentro.

Ratings agency Moody’s Investors Service has revised its outlook on the foreign currency credit rating of Colombia from negative to stable. Moody’s currently rates the country’s foreign currency bonds Ba2. Last month, ratings agency Standard & Poor’s raised Colombia’s long-term foreign and local currency credit rating outlook, from stable to positive. The improved outlooks are a product of Colombia’s better growth prospects brought about by greater domestic security and renewed confidence in private investment.

Six companies have lined up to bid for Colombia’s state-owned telecoms provider, Colombia Telecom, in what will be one of the Uribe government’s largest privatizations. The bidders include Telmex, owned by Mexican entrepreneur Carlos Slim, which tried but failed to buy the Colombia fixed-line provider last year for $350 million. The deal fell through after the country’s Controller General advised against it. Other interested parties include Spain’s Telefónica and Venezuelan firm CANTV.

Colombia bought back $601 million of foreign-currency bonds yesterday, Monday, in a move to reduce foreign currency debt obligations. Surging commodity-led export revenues were used to fund the repurchase of the dollar- and euro-denominated debt instruments maturing between 2006 and 2011. The sovereign also sold $306 million worth of peso-denominated bonds to help fund the buyback. The local currency bonds — Global TES — mature in 2015 and are part of an issue first launched last February. Colombia cancelled a planned sale of new paper maturing in 2021. The deal was managed by JP Morgan Chase & Co and Morgan Stanley. Last year, Colombia’s foreign currency-denominated debt as a share of overall debt fell to 33% from 44% in 2004.

Global mining group company Xstrata, headquartered in Zurich, is to buy a 33.3% stake in Colombia’s Cerrejón mine, the world’s largest open-cast coal mine. Xstrata will buy the stake for $1.7 billion from Swiss-owned Glencore, which bought the share in 2000. The mine was originally developed by a joint venture between state-owned Carbocol and Intercor, a subsidiary of US ExxonMobil. In 2000 Carbocol sold its stake to Anglo American, BHP Billiton and Glencore; they later bought out Intercor.

Colombia and the US have agreed final terms of a free trade deal following a visit by President Alvaro Uribe to Washington. The two countries managed to iron out remaining differences over agricultural exports. Colombia is forecasting a 50% growth of exports over the next three years to the US, it main trading partner. The free trade accord will see lowering of tariffs and changes in investment restrictions between the two countries. The accord still needs Congressional approval.

Colombia is planning to sell off state-owned regional electricity distributor Enertolima on March 15, with a minimum price set at $90 million. The government says it will sell the distributor to the highest bidder, granting a 99.9% stake. The sale had been postponed from February 15 at the request of several bidders. So far, six bidders have pre-qualified for the auction, among them Codensa, a Bogotá-based unit of Spain’s Endesa and Aguas Capital, a water and sewage company controlled by the Cuban government.

Colombia’s improving economic prospects have prompted ratings agency Standard & Poor’s to raise the country’s long-term foreign and local currency sovereign credit ratings outlook to positive from stable. “The country’s better growth prospects are largely a result of significant and sustained improvement in domestic security that has, in turn, led to renewed domestic confidence and double-digit growth in private investment, raising the
ratio of investment to GDP to above 21%,” noted S&P credit analyst Richard Francis.