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Colombia,United States : IFC Issues Bonds in Colombia to Bolster Development of Capital Markets
Publish Date : 25-Sep-2017
IFC, a member of the World Bank Group, increased its efforts to bolster capital markets in Colombia by becoming the first multilateral organization to issue bonds in the country under a new regulation that facilitates multilateral organizations issuances in the local market. This will pave the way for other multilateral institutions to also tap the Colombian market for their own issuances.
The COP33.7 billion issuance ($11.6 million) in the local Colombian market was purchased mostly by insurance companies that were interested in investing in local bonds from an international institution with a triple-A credit rating like IFC. The issuance is part of an IFC program for bond issuances in Colombia that could total as much as $1 billion in the next three years.
The issuance leveraging on the new regulation established by the Colombian government that allows multilaterals to issue bonds in the local Colombian markets to institutional investors under the umbrella of their global issuance programs.
The bond sale is also part of IFCs strategy to promote the development of capital markets in Colombia by introducing a new funding alternatives and setting an example that can be used in the future for further issuances by IFC or by other similar institutions. The issuance is an example of harmonizing issuance and disclosure standards for multilateral organizations across global markets. The issuance will be used for IFCs operations, including funding of projects Colombia.
With this issuance we are showing again IFCs leadership in promoting the development of capital markets in Colombia, said Carlos Pinto, IFCs manager for the Andean Region. This operation has set the groundwork for other issuances by multilaterals in the Colombian market and we are very proud of our work with the Colombian government to establish the right regulatory framework to make this happen, Pinto said.
This transaction follows other landmark operations in Colombia by IFC, such as fully subscribing the first green bond issuances by two local banks earlier this year.
The new bond sale is listed in Colombian Stock Exchange. Credicorp acted as the lead manager of the transaction and the legal advisor was Gomez-Pinzn Zuleta.
Juan Pablo Crdoba, president of the Colombian Stock Exchange (BVC), said that the trust that IFC has placed with this transaction demonstrates that capital markets are the perfect complement for the long-term funding that is needed for large-scale projects in Colombia and the region.
IFC relies on borrowings in international capital markets to finance its lending activities in emerging markets. IFC issues debt in a range of markets, currencies and structures. In the fiscal year ended June 2017, IFCs funding program totaled $16.3 billion, including medium and long-term funding, financing in local currency and discount notes outstanding issuance. IFC is increasingly using its borrowings issuances as a tool to promote capital markets development in emerging and frontier markets.
The transaction also showcases IFCs efforts to support the development after having invested and mobilized nearly $8 billion since 1956 in Colombia. IFCs strategy for Colombia is now largely focused on providing support to key private sector actors who can support the development of the countrys capital markets as well increase access to finance for Colombian companies.
