BOGOTA May 2 Colombian companies are preparing
a wave of bond sales, jumping at the opportunity to borrow at
lower cost after J.P. Morgan's decision to boost the Andean
nation's debt in its indexes drew an influx of foreign cash into
its financial markets.
Corporate issuers had been sidelined from the local capital
market due to a broad rise in interest rates, as investors
expected the U.S. Federal Reserve to reduce economic stimulus
measures and raise borrowing costs.
But J.P. Morgan's decision to boost its weighting of
Colombian government debt from the end of May prompted a surge
of foreign investment that drove down yields on peso-denominated
2024 TES government bonds by around 100 points, the lowest in 10
Seven companies look set to seize the opportunity to borrow
at lower cost after four months that saw barely any debt
issuance activity - just 640 billion pesos ($332.4 million) in
two issues, according to data from Bogota's stock exchange.
"This could be the best moment to issue, the curve of TES is
an indicator for many other investment curves and the change in
J.P. Morgan's weighting is already well priced in," said Carlos
Ramos, a fixed income analyst at Corficolombiana.
J.P. Morgan's heavier bond weighting is expected to draw an
additional $4 billion to $10 billion into Colombia's bond and
stock markets this year and next according to analysts.
Compounding the slide in yields is the imminent maturity of
13.2 trillion pesos ($6.83 billion) of TES bonds, most but not
all of which will be re-invested into fresh government bonds
while some of the remainder snaps up new corporate debt.
Lead managers consulted by Reuters expect at least seven
debt issuances in the local market through the end of this year,
totaling at least 5 trillion pesos, at least three of which will
be launched in May.
"It's a very good moment, because the expectation of a fall
in yields, especially in longer-term bonds, gives private debt
issuers an opportunity ... to go to the market at more
attractive rates," said Milena Franco, analyst at Acciones y
The three issuances expected this month are 700 billion
pesos from the GrupoSura holding which has
authorization to sell up to 1.3 trillion pesos, between 500
billion and one trillion from financial conglomerate Davivienda
and 850 billion pesos from power utility Emgesa.
Davivienda's issue could be bigger still, given it plans to
issue up to two trillion pesos in bonds this year.
Other issues later in the year could come from state-run oil
company Ecopetrol, the financial conglomerate
Sociedades Bolivar, Banco de Occidente and the
financial firm Bancamia.
($1 = 1925.5000 Colombian Pesos)
(Writing by Julia Symmes Cobb and Peter Murphy; Editing by