(Bloomberg) — Colombia sold $3.64 billion worth of dollar bonds on Monday, tapping the international bond market for the first time in nearly seven months.
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The South American country sold $2 billion in bonds due in 2036 and $1.64 billion in bonds due in 2054, with yields of 7.8% and 8.5%, respectively, tighter than the initial negotiated prices of 8.15% and 8.8%. Ta.
Citigroup, Itau BBA and SMBC Nikko are handling the deal, according to the filing. The proceeds will be used for general budgetary purposes and to fully repurchase Colombian government bonds maturing in 2026 and 2027, according to the filing.
Colombia last sold hard currency bonds in April for $1.3 billion. The latest borrowing comes as Congress is debating a plan to encourage the transfer of central government to local regions, which could sharply increase the ratio of debt to gross domestic product (GDP).
Colombian assets have been hit in recent weeks by concerns over the country’s fiscal sustainability after lawmakers and Gustavo Petro’s government failed to agree on a 2025 budget. The government has announced that it will increase sales of local currency bonds to cover spending this year.
The country’s finance ministry has already cut some spending this year to stay within fiscal rules, a decision that was well received by markets. But analysts warn that Colombia’s dire fiscal outlook could ultimately have a negative impact on debt metrics.
“The downside is that we lost a selling opportunity in September when U.S. bond yields fell,” said Andres Pardo, head of Latin America macro strategy at XP Investments.
After hovering at the lowest level since 2021 earlier this year, the additional yield investors demand on Colombia’s external bond holdings has risen to 3.2 percentage points compared to U.S. Treasuries on the same date.
–With assistance from Oscar Medina, Michael Gambare and Brian Smith.
(Updates pricing details starting in first paragraph.)
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