Colombia fields heavy orders in bond return
January 24, 2019 |
Orders approach $12bn on the third sovereign offering this year
Colombia hit emerging market investors' sweet spot on Wednesday with a two-part bond deal for $2bn that was nearly six times covered, LatinFinance has heard.
"It has been a good day for the market, and investors believe in Colombia's new government," said a banker who worked on the deal.
Colombia issued $1.5bn in new 30-year notes and also reopened its 4.5% 2029 bonds for $500m.
The bookrunners Bank of America Merrill Lynch, BNP Paribas and Morgan Stanley put the initial price talk on the new 2049 notes at 240bp over US Treasury notes, but they tightened the spread to 215bp after receiving receiving orders from 273 investors, the banker said.
The bonds priced at 99.705 with a 5.2% coupon to yield 5.22%, he said.
The bookrunners started the 2029 retap at 190bp over US Treasury notes, but they lowered the spread to 170bp and priced the notes to yield 4.46%, the banker said.
"Overall, the order book was in decent shape, and the concessions were in line with the high-grade market right now," said a debt capital markets banker who was not on the deal.
An investor in New York called Colombia "a mildly improving credit with a positive reform agenda."
The government has included pension cuts in its plans to trim state spending next year.
"We have seen some good deals in the emerging markets recently, and Colombia is taking advantage of that," the investor added, alluding to bond deals this month by Uruguay and Mexico.
Another investor said Colombia priced the new bonds 0.5% to 0.75% over where its 10-year and other comparable notes were trading.
The market has reacted favorably to the economic policies of President Iván Duque, and orders reached $8bn when Colombia issued the 2029 notes in October last year. But a recent car bombing by the ELN rebel group could signal a resurgence in attacks and cast doubts on some of Duque's other policies.