(Oct 29): Colombia sold US$3.64 billion (RM15.91 billion) of dollar bonds on Monday, tapping international debt markets for the first time in almost seven months.

The South American country sold US$2 billion in notes maturing in 2036 to yield 7.8% and US$1.64 billion in bonds due in 2054 to yield 8.5%, tighter than initial price talks of 8.15% and 8.8% respectively.

Citigroup, Itau BBA and SMBC Nikko are handling the deal, according to a filing. Proceeds will be used for general budgetary purposes, and to buy back up to all of Colombia’s notes maturing in 2026 and 2027, the filing showed.

Colombia last sold hard-currency bonds in a US$1.3 billion transaction in April. This time, it’s borrowing as its congress discusses a proposal to boost central-government transfers to regions, a move that may sharply increase the ratio of debt to gross domestic product.

Colombian assets have been hit over the past few weeks on concerns surrounding the country’s fiscal sustainability, after lawmakers and the Gustavo Petro administration failed to agree on the 2025 budget. The government announced that it was increasing its sales of local currency bonds to finance this year’s expenses.

The country’s Finance Ministry already made some cuts to this year’s spending in order to stay within the limits of the fiscal rule, a decision that was well received by markets. However, analysts have warned that Colombia’s dire fiscal outlook could eventually hurt debt metrics.

“The downside is that they lost a window of opportunity to sell when Treasury yields dropped in September,” said Andres Pardo, the head of LatAm macro strategy at XP Investments. 

The extra yield investors demand to hold Colombia’s external debt has climbed to 3.2 percentage points over similarly dated Treasuries, after hovering the lowest levels since 2021 earlier this year.

Uploaded by Tham Yek Lee