Investors Devour Jumbo Colombia Tap

Colombia has reopened its 7.375% of 2019 bonds for $1bn, doubling liquidity on the back of a near $4bn book. The Ba1/BBB minus/BB+ sovereign retapped the notes – first issued in January – at 99.99 to yield 7.375%, or UST plus 458.5bp.The issuer indicated 7.500%-7.625% guidance in the morning on a benchmark-sized transaction, investors say, then quickly tightened to 7.5% area as demand surged, and priced at the low end. “The republic saw a window of opportunity and had been exploring this possibility for some time,” Maria Catalina Escobar, head of international capital markets at Colombia’s ministry of finance and public credit, tells LatinFinance. The sovereign indicated it would pre-fund 2010 if it saw an opportunity and the transaction is consistent with the strategy of anticipating any possible deterioration in market conditions. Demand reached about $3.8bn, according to bankers managing the sale, from about 150 accounts in the US, Europe, LatAm and Asia. The bonds were trading at 102.5-103.25 late Monday and bankers on the deal pegged the reopening concession at 35bp, based on the previous closing yield of 7.02%. Investors and bankers away from the deal meanwhile calculated the pickup at 35-50bp. “The concession seemed generous at first, but tightened as the deal gained momentum, and ended up being fair for such a large amount,” says a banker away from the transaction. He notes that if an issuer can get such a strong book in this market, going for $1bn is a sound strategy. Citi and JPMorgan managed the transaction, which pre-funds 2010. The original $1bn January sale priced at 99.136 to yield 7.500%, via Barclays and Morgan Stanley, and helped cover 2009 needs. The bonds were heard bid at 101.5 bid Monday afternoon. The issue sets a robust benchmark for the throng of Colombian corporates lining up to tap the same tenor in dollars. Escobar says there was no specific discussion of corporates in the present issue, but that the sovereign does take into account the p