Category: Regions

As was widely expected by the market, Colombia’s Central Bank raised its benchmark interest rate 25bps, from 8.75% to 9%, at its monthly monetary policy meeting on Friday. This is the seventh consecutive month the bank has raised the rate. In a further move to fight inflationary pressures and to curb lending, the bank once again raised commercial banks reserves on deposits. The Central Bank is targeting inflation of between 3.5% and 4.5% this year. Inflation for the 12 months through May was 6.23%, well above that target while consumer prices for the first five months of the year rose to 4.42%.

Colombia has completed the tender for nine classes of bonds it started Wednesday, receiving more than $1bn in offers on a buyback capped at $950m worth of outstanding bonds. As a result the sovereign was able to choose which maturities it wanted to retire, and ended up focusing on the shorter-dated instruments, said a banker. The sovereign chose to take out the following quantities of the following classes of bonds: 100% of the 8.625% bonds due 2008, the 9.750% bonds due 2011, the 9.75% bonds due 2009 and the 10.50% bonds due 2010. And 50% of 11.75% global TES due 2010 and 25% of 2013 FRNs. Colombia didn’t buy back any of the 10.00% 2012 bonds, the 10.75% 2013 bonds, or the 8.70% 2016 notes. Deutsche Bank and Citi led the exchange and previous day’s $1bn equivalent TES offering.

Titularizadora Colombiana – Colombia’s answer to Fannie Mae – has sold just over $51m worth (100.13bn pesos) of 10-year residential mortgage-backed securities (TIPs) Thursday. The IFC-backed institution plans to sell a second 100bn-peso tranche of its peso-denominated, fixed-rate TIPs later this month. The securities will yield 9.99%. The mortgages backing the securities were originated by Banco Davivienda, Colombia’s third-largest bank.

Colombia’s Central Bank is seen likely to increase the benchmark interest rate in its monthly monetary policy meeting on Friday. Continuing inflationary pressures will prompt the Bank to raise the rate from 8.75% to 9%, according to a survey carried out by Dow Jones. The Central Bank is targeting inflation of between 3.5% and 4.5% this year. Inflation for the 12 months through May was 6.23%, well above that target while consumer prices for the first five months of the year rose to 4.42%.

Colombia’s national urban transport system is to be bolstered with the help of a $207m loan from the World Bank via its unit the International Bank for Reconstruction and Development. A plan to roll out Bogotá’s Transmilenio system in other cities such as Medellín and Barranquilla will be financed with the help of the loan. The fixed-spread loan is repayable in 13.5 years, and carries a grace period of 8.5 years.

Colombia has sold $1bn worth of global COP-denominated 2027 TES bonds to finance a tender for up to $950m in nine classes of fixed and floating rate bonds. The BB+ rated issue priced at par to yield 9.850%, which investors say comes at an attractive pickup to the interpolated curve. The 2015 global TES are trading at around 9.09%, implying that Colombia is paying 76bp for the extra 12 years. The differential between the two global maturities is wider than what is seen on the local curve, where the spread between the local TES 2009 and local TES 2020 is around 35bp. Orders for the bonds totaled $5.14bn. On Tuesday, the sovereign began accepting tenders for four classes of fixed rate notes with maturities ranging from 2008 to 2013 with coupons from 8.625% to 11.750%; and five classes of floating rate bonds due between 2009 and 2016 and coupons ranging from 8.700% to 10.750%. Citi and Deutsche Bank are leading the buyback and managed the sale of the 2027s.