Fitch Sees Colombia Corporate Debt Growth

The private sector is expected to pump out at least COP5.4trn ($2.5bn) in debt this year, up from just over COP4.5trn in 2006, according to Gláucia Calp, senior director at Duff & Phelps de Colombia, an associate of Fitch Ratings. Diminishing needs from the government – COP83.7trn in TES issuance, down from COP85.0trn in 2006 – will leave local investors hungry, says Calp. Fitch estimates that pension funds can absorb close to COL2.7trn in private debt through 2007, and that they will need to buy an additional COP1.5trn in stocks to maintain participation in the portfolio. Calp adds that the COP5.4trn debt issuance figure is very conservative. Markets are still attractive for issuers, but local rates are rising. International investor participation in domestic debt markets is still very limited, says Calp. Fitch sees opportunity in financial institutions, especially as domestic credit starts to grow. It also pinpoints RMBS as mortgage portfolios grow, retail – which is starting to modernize – and telecoms, where mobile penetration is high, but internet use low.