Colombia Group Taps Water Bonds

Colombia’s Grupo Financiero de Infraestructura (GFI) has issued COP125bn-equivalent ($62.4m) in UVR-denominated domestic bonds supporting water projects in various small municipalities. The issuer returns with the so-called “Bonos Agua” five months after an initial attempt to place them failed because of lack of demand. Investors needed time to understand the novel structure, according to an official involved in yesterday’s transaction, which was sold to various types of Colombian institutional buyers. The UVR-denominated 19-year bonds pay 9%. In the deal, the first of its kind for Colombia, the issuer will on-lend proceeds to a group of 30 municipal governments to support water and sewerage projects. The cities will pledge future revenues to the trust to guarantee repayment of the bond. The issue is the first from a UVR2bn (COP375bn) program, under which the country’s state and municipal level governments can access credit to finance water and waste improvements at rates they could not achieve in the commercial bank or capital markets. Privately held GFI plans to do 1-2 bond issuances per year, as well as add new municipalities to the scheme. Colombian boutique Konfigura structured the transaction, and Corredores Asociados, Citi, Correval and Serfinco distributed it. The original sale was postponed in July when the minimum order threshold was not met.