Thursday, 2 April 2009

CAF Sells Debt in Colombia -- Showing Resilience of Local Corporate Debt Market During Crisis

Corporación Andina de Fomento, the multilateral institution created by the Andean Region nations to promote investment and lending in greater scale, sold 240 billion pesos (or about $95 million) in fixed-rate bonds on Colombia’s domestic debt markets. The Caracas-based multilateral sold 112 billion pesos in 2014 bonds at 9.60 percent, and 128 billion pesos in bonds due in 2019 at a yield of 10.79 percent. This is CAF’s third peso-denominated bond offering in Colombia -- it had sold 240 billion pesos of floating-rate debt in December. Market talk had put a CAF offering at the end of the second quarter; in a recent talk we had with one bank executive, he said the chances of issuing in Colombia were gaining momentum because of the local markets' rising demand for corporate and quasi-government debt paper amid tanking bond yields. InterconexiónEléctrica SA, the largest utility in Colombia, is expected to place almost 200 billion pesos in six- and nine-year bonds as early as this week. The Colombian debt market is, thus, the most active so far in Latin America; relative to Brazil or Mexico, offerings have been ten times bigger, the market response has been active and movements in yields have reflected the different stages of the current liquidity crisis.

The local securities unit of BBVA, the Spanish lender, managed the transaction. Demand for the CAF bond topped 300 billion pesos, according to buyers of the issue.

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