Colombia Launches Tender Offer to Repurchase Global Bonds

Mint

14 hours ago

(Bloomberg) -- Colombia announced it would repurchase some of its outstanding global bonds with cash, as it looks to revamp its financing strategy amid increasing concerns about the widening budget deficit.
The cash tender offer seeks to repurchase global notes maturing in 2030, 2031, 2032, 2041, 2042, 2044, 2045, 2049, 2051 and 2061, the government said in a statement. The offer is not conditioned upon any minimum participation in any of the series.
The move was expected after the Finance Ministry said last month that it planned to secure up to $10 billion in bank loans denominated in Swiss francs, and use the proceeds to buy back some of the more discounted maturities. Through the operation, the government seeks to lower borrowing costs and reduce the ratio of debt to gross domestic product. Still, there has been no announcement on the bank loans to date.
'Despite some question marks on the size of the buyback and the ultimate financing source, this should be a positive technical anchor for the Colombia eurobond curve,' said Jason Keene, a strategist at Barclays. 'We would not be surprised to hear some loan announcements in the coming days.'
Colombian bonds are among the best performing in emerging markets Monday, with notes maturing in 2061 up 1.7 cents on the dollar to trade at 56.5 cents, according to indicative pricing data compiled by Bloomberg.
The impact of the news may be limited though, said Pedro Quintanilla-Dieck, a strategist at UBS.
'While this approach should continue to support longer-dated bonds and may modestly lower sovereign funding costs in dollars, we do not expect it to materially alter the upward trajectory of the debt burden, particularly as the latest data continue to point to higher fiscal deficits,' he said.
Last week, Colombia's government approved an increase in the 2026 primary deficit to 2% of GDP from a previous target of 1.4% of GDP. The overall deficit, which includes debt repayments, remained unaltered at 7.1%. The change will make it more difficult to resume the fiscal rule in 2028, which is temporarily suspended due to higher sending pressures, according to an independent committee that oversees the nation's fiscal accounts, called CARF.
Colombia has said it plans to tap international markets once this year and twice in 2026, aiming to raise approximately 5 billion euros.
--With assistance from Oscar Medina.
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