Outmaneuvering the Market

Outmaneuvering the Market

Colombia

In March, a team of Colombian government officials and investment bankers went on the road to market a World Bank-guaranteed bond that had been in the works for a year. The government planned to raise over $1 billion from the deal, enough to meet about half its financing needs for this year. But on March 26, in the middle of the roadshow, Standard&Poor's downgraded Argentina to B+ from BB-. This made Colombia, fighting a drug-financed guerrilla insurgency, an even harder sell than usual. Worse still, one of the Argentine bonds affected by the downgrade was a 1999 World Bank-guaranteed bond, similar to the new Colombian one. When the zero coupon Argentine bond lost its investment-grade

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