January 15, 2016
When Colombia adopted International Financial Reporting Standards last year, ColTel found itself in a bind. An equipment lease acquired from the government in 2006 threw the company’s equity position into negative under the new accounting standards. To strengthen its balance sheet without diluting shareholders, ColTel turned to a hybrid capital structure.
The 8.5% $500 million perpetual instrument marks the first hybrid issuance from Colombia. The transaction is structured such that ColTel can defer coupon payments — although it must pay them if it pays dividends on equity.
Perhaps even more remarkable was the rating. Globally, issuers of hybrid debt are typically well-rated. ColTel itself i
A sub-investment grade issuer found strong demand for the first hybrid perpetual bond from Colombia