Colombia raised $2.5 billion in a two-part sale of social bonds on Tuesday, becoming the third sovereign issuer from Latin America to tap the international market this week as borrowing costs fall. And more countries could follow, analysts and investors told LatinFinance.
Colombia sold $1.5 billion worth of 8% 12-year bonds and 8.75% $1.5 billion in 30-year notes, the sources said.
The sovereign issued the 2035 notes at 97.748 to yield 8.3% after opening the initial price talks around 8.75% and setting the guidance between 8.3% and 8.35%, according to a sell-side source. Meanwhile, it priced the 2053s at 97.927 to yield 8.95% after opening the deal around 9.375% and tightening to between 8.95% and 9%.
“The offering spreads were very attractive given current market conditions and Colombia’s improving fundamentals,” said Armando Armenta, a senior economist for Latin American fixed-income and currency markets at AllianceBernstein.
Bruno Rovai, a sovereign strategist at Macquarie Asset Management, said Colombia had been expected to come to market before year-end to complete financing for this year’s budget and pre-finance part of its 2024 needs.
“The size of the book shows there is still appetite in the market for LatAm sovereign issuers across the rating spectrum,” he said, adding that orders peaked at $11 billion.
The Colombian government plans to use the proceeds from the sale for general budgetary purposes, including green, social and sustainable projects, according to a prospectus filed with the SEC.
BBVA, Citi and HSBC were joint bookrunners on the bond deal, sources said.
Colombia tapped the market a day after Costa Rica and Uruguay moved to take advantage of a drop in borrowing costs to raise a combined $2.2 billion.
Amenta said other issuers could come to market if current bond market conditions are maintained.
Pablo Goldberg, emerging markets head of research and portfolio manager, said there could be additional issues from Chile, Paraguay and Brazil.
“We do believe that LatAm sovereigns are prime candidates for further issuance this quarter and at the beginning of the new year, largely as issuance in the space has lagged other EM sectors,” Goldberg said.
Rovai, for his part, said Mexico, Peru and the Dominican Republic could seek fresh funding before the end of the year. Panama is no longer expected to issue new debt in 2023 as its government seeks to quell protests against First Quantum’s local copper mine, he added.
Source: Latin Finance