Colombia plans to sell new dollar bonds and buy back debt

The government will sell dollar-denominated debt due 2034 with a yield of 8%, according to a person familiar with the initial discussions, who asked not to be named because she is not authorized to discuss the matter. Part of the proceeds will be used to repurchase the country’s global bonds due next year, with coupons of 4% and 8.125%.

“In general, it is a good time, there is a good market and they are ahead of other potential issuers,” said william sneadanalyst of BBVA in New York. “Investors have been expecting more primary activity.”

The country last turned to international markets less than two months ago, when it sold US$1.6 billion to pay off existing debt. Now, once again, it joins a number of Latin American nations that are taking advantage of lower bond prices to buy back securities. El Salvador has already bought back some of its debt, while Argentina and Ecuador have announced plans for similar deals.

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The sale also comes amid the president’s ambitious plan, Gustavo Petro, to reform the country’s health and pension systems this year and the labor market. While the details of the pension bill are still unclear, analysts warned that pension funds are important players in Colombia’s asset market and changes to the system could affect bonds and the peso.

Holders of the old bonds maturing in 2024 will have until 1:00 p.m. New York time to tender their debt, according to a statement on Tuesday. The amount of the repurchase has yet to be determined and the Settlement is scheduled for January 30.

The country’s existing bonds were down less than a penny on Tuesday. The pair of notes due 2024 was the exception, according to indicative price data compiled by Bloombergrising in the session and on track to match the government’s premium in the public offer.

BBVA Securities Inc., Itau BBA USA Securities, Inc. and JPMorgan Securities LLC They are the installers of the new issue. The new bonds will be listed on the Luxembourg Stock Exchange.

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