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The Star
7 days ago
- Business
- The Star
Colombia launches tender offer to repurchase global bonds
Through the operation, the government seeks to lower borrowing costs and reduce the ratio of debt to gross domestic product. — Bloomberg BOGOTA: Colombia is announcing that it will 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. Some sovereign bonds leaped to a high for the year on the news. 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 US$10bil 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 were among the best performing in emerging markets on Monday, with notes maturing in 2061 up 1.6 US cents on the dollar to trade at 56.4 cents, the highest since December, 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 financial deficits,' he said. Last week, Colombia's government approved an increase in the 2026 primary deficit to 2% of gross domestic product (GDP) from a previous target of 1.4% of GDP. The overall deficit, which includes debt repayments, remained unaltered at 7.1% of GDP. The change will make it more difficult to resume the financial rule in 2028, which is temporarily suspended due to higher spending pressures, according to an independent committee that oversees the nation's fiscal accounts. Colombia has said it plans to tap international markets once this year and twice in 2026, aiming to raise approximately five billion euros. The spreads on the country's debt look attractive, said Soeren Moerch, a portfolio manager at Danske Bank, who has built up a large position as he bets on a shift to more market-friendly policies following next year's presidential elections. 'The buy-back is a brave experiment,' Moerch said. 'But in a country that has very solid institutions, it would trade at much tighter spreads with more prudent fiscal policies.' — Bloomberg
Mint
04-08-2025
- Business
- Mint
Colombia Launches Tender Offer to Repurchase Global Bonds
(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. More stories like this are available on
Yahoo
30-01-2025
- Business
- Yahoo
El Salvador Passes Change to Bitcoin Law, Sparking Bond Rally
(Bloomberg) -- El Salvador's dollar bonds rose the most in emerging markets Thursday after lawmakers approved changes to the nation's Bitcoin law that were needed to secure an International Monetary Fund loan. Manhattan's Morning Commute Time Drops With New Congestion Toll Trump's Federal Funding Pause Threatens State Financials Housing Aid Uncertain After Trump's Spending Freeze Memo US Students' Reading Scores Drop to Worst in More Than 20 Years Texas HOA Charged With Discrimination for Banning Section 8 Renters Government debt gained across the curve, with notes due in 2054 rising 2.4 cents on the dollar to 107 cents, according to indicative pricing data compiled by Bloomberg. The jump signaled investor optimism that the Central American country is close to cinching the $1.4 billion deal with the IMF. 'This was the law they needed to pass' to get the multilateral funding, said Barclays strategist Jason Keene. 'We expect to see the IMF Board approval in the coming weeks.' The changes approved by congress make it voluntary for businesses to accept Bitcoin as a form of payment. It also requires the government to pay its domestic and foreign obligations in the currency they were issued, according to a report in the newspaper La Prensa Grafica. El Salvador's dollar debt has handed investors a 30% gain over the past 12 months, about triple the average return across an index of emerging-market sovereign bonds. In 2021, El Salvador became the first country to adopt the cryptocurrency as legal tender — along with the dollar — instantly giving President Nayib Bukele fame as a Bitcoin pioneer and pitting his country against the IMF, which objected to the idea. After years of negotiation, Bukele relented and agreed to changes in the law to comply with the IMF. That's helped drive prices in the bonds, some of which now trade above par. While bonds can continue to perform if the country delivers further economic reforms, 'an IMF deal is pretty fully valued here,' said Thys Louw, a portfolio manager at Ninety One UK Ltd. Indy Pass, the Anti-Vail Seasonal Ski Ticket, Is Gaining Fans What America's Tech Billionaires Really Bought When They Backed Donald Trump Musk Pitches New Narrative as Tesla Sales Fall The Internet Almost Killed Barnes & Noble, Then Saved It Forget Factories, Small US Towns Want Buc-ee's Gas Stations ©2025 Bloomberg L.P.
