Colombia

Sergio Díaz-Granados, executive director for Colombia at the Inter-American Development Bank (IADB), will become the new executive president of Latin American multilateral lender CAF in September after obtaining more votes than Argentine candidate Christian Asinelli.

Colombia’s sovereign bonds experienced a modest sell-off on Friday after Fitch become the second rating agency in less than two months to downgrade the government’s credit rating to sub-investment grade. But analysts noted that the market was already largely expecting the downgrade, which is likely to limit further widening.

SierraCol Energy, the Carlyle Group-owned spin-off of Occidental Petroleum’s onshore operations in Colombia, sold its inaugural international bond issue on Monday to continue a surge in LatAm high yield issuance — though some bankers felt the underwhelming aftermarket performance of other recent borrowers affected the deal.

Frontera Energy on Thursday became the latest Latin America oil and gas company to take advantage of strong oil prices to tap bond markets, with the company — which operates mostly in Colombia — increasing the size of a five year deal and attracting a broad range of investors.

Emerging market fixed income analysts are right to assert that the asset class is well placed to avoid a taper tantrum such as it endured in 2013. That does not mean issuers should not be hurrying up their funding plans.

Two Colombian oil exploration and production companies began deal marketing on Monday as bankers and investors said that continued social unrest and political volatility in the country will not stop bond buyers from putting cash to work.

Chile, Peru and Colombia — previously hailed by EM investors for orthodox economic policymaking — are under pressure amid social unrest and political polarisation. But as the upheaval whirls around them, their credit in the bank with bondholders, after years of impressive debt management, is a major asset.

Colombia’s credit rating was finally downgraded to sub-investment grade on Wednesday evening, as many had expected it to be. But it was Standard & Poor’s — not Fitch, as most had anticipated — that moved first.

Investors in Latin America are growing increasingly concerned that social unrest in Colombia, where tax reform plans are in tatters and more than 40 people have been killed, is a sign of things to come, with sovereigns facing severe pressure as they attempt to improve credit profiles that have been battered by the coronavirus pandemic. Yet sovereign bond markets are seeing only modest, short-lived sell-offs, given the enormous liquidity still in bond markets.

AI Candelaria, the holding company through which private investors own a stake in Colombian oil pipeline Ocensa, returned to bond markets on Monday with a larger than expected $600m deal as Ocensa’s resilience during the coronavirus pandemic outweighed concerns about social unrest and a potential credit rating downgrade in Colombia.

AI Candelaria, the holding company through which private investors own a stake in Colombian oil pipeline Ocensa, is looking to issue senior secured bonds in the coming days as bankers say a sell-off in Colombian bonds remains relatively small despite major social unrest.

Colombia’s sovereign bonds continue to trade wider as the government faces fierce opposition to a tax reform designed to salvage its investment grade rating. As protestors flocked to the streets on Wednesday to oppose the bill, which is being debated in Congress, the deputy finance minister said that the final version of the reform may not be as positive for government revenues as the initial version.