Sovereign Report

Jun 1, 2002

Colombian Swaps Short-Dated Bonds

In May, Colombia swapped $600 million in dollar-denominated short-dated bonds for longer-dated Colombian peso bonds to improve the maturity profile of its public debt. The government also set out to reduce its currency and refinancing risk by converting dollar debt into local currency debt. The exchange was originally planned for $250 million, but later more than doubled to $600 million. The transaction lengthened Colombia's debt profile to 6.3 years from 6.18 years previously.

In May, the International Finance Corporation (IFC), the private sector arm of the World Bank, invested $2.2 million in mortgage-backed securities issued by Colombian secondary mortgage market company, Titularizadora Colombiana. It issued securities with five- 10- and 15-year tranches for a total of $212 million. The bonds yield 4%, 5.41% and 6.05%, respectively and were sold primarily to local pension funds and banks. The IFC provided a credit enhancement facility...

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