Colombian Munis Prep “Water Bonds”

Colombia’s Grupo Financiero de Infraestructura is preparing to sell Wednesday up to COP187bn ($89m) equivalent in “bonos agua” on the domestic market, on behalf of a trust supporting a group of small municipalities. The 19-year notes will be denominated in the UVR inflation-linked unit and pay a fixed rate up to 8%. The issue is the first from a UVR2bn (about COP375bn) program, under which the country’s state and municipal level governments can access credit to fund water and waste improvements. In the transaction, structured by boutique Konfigura, 45 cities and one state will pledge future revenues to the trust to guarantee repayment of the bond. “The object is to extend credit to very small entities that wouldn’t normally have access to the markets,” Andres Florez, Konfigura partner, tells LatinFinance. He adds that the transaction is the first of its kind in Colombia, and modeled after similar structures in Europe and other regions. The idea is to have 1-2 bond issuances per year, he says, as well as add new governments to the trust. Corredores Associados is managing the sale.