Colombia is selling dollar bonds for the first time since January to address a widening budget gap under its new administration. The nation is issuing dollar bonds due in 2032, 2037 and 2056, with initial price talks around 7.35%, 7.9% and 8.45%, respectively. The deal follows weeks of talks with the International Monetary Fund to discuss solutions for what officials claim is the widest fiscal gap in history.
President Abelardo de la Espriella said the government will soon present a proposal with measures to ensure public finance sustainability. The adjustment bill follows the contentious approval of the nation's budget, issued by decree after the Senate and House failed to reconcile differences. The interior minister was fired in the aftermath.
Last month, Colombia's top economic officials told investors in New York they are optimistic Congress will approve the austerity plan, suggesting external borrowing for next year may be near $15 billion. Economists say the government needs these resources to close rates and cover 2027 needs. Colombia's dollar bonds were trading slightly lower on the day.
The new administration has blamed its predecessor, Gustavo Petro, for imbalances that spiraled after he suspended spending limits. To face pressure, the government resorted to unorthodox strategies, including aggressive bond buybacks and a controversial total return swap in Swiss francs. BBVA, Itau and JPMorgan Chase & Co. are managing the deal.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing