Colombia Offered $1.5 Billion in Loans by Japanese Banks

  • Finance Minister Mauricio Cardenas speaks in Davos interviews
  • Banks may charge 1 percentage point less than USD bond yield

Japanese banks are interested in lending Colombia the $1.5 billion it had been planning to raise via foreign bond emissions this year, Finance Minister Mauricio Cardenas said.

The banks indicated that they could make the loans at about one percentage point below the yield on Colombia’s benchmark dollar bonds, Cardenas said on Thursday in an interview in Davos, Switzerland, where he’s attending a meeting of the World Economic Forum. The yield on the country’s sovereign bonds due in 2026 fell 0.1 percentage point on Thursday to 5.62 percent from a peak of 5.72 percent on Wednesday.

Mauricio Cardenas
Mauricio Cardenas
Photographer: Cris Bouroncle/AFP/Getty Images

“Here in Davos, we have been contacted by some Asian banks which have a lot of liquidity, particularly Japanese banks, which are interested in offering credit lines for these $1.5 billion dollars,” Cardenas said. “This could be an opportunity for Colombia.”

Cardenas didn’t say which banks made the offer. The government is also exploring the possibility of borrowing in euros, he said in a separate interview on Bloomberg TV.

The Colombian government is fighting to stay within the limits of its balanced budget act, as its finances were hit by the slump in oil prices. With the oil price at $30 per barrel, the equilibrium exchange rate of the peso seems to be about 3,300 per dollar, down from around 3,000 per dollar when oil was at $40 per barrel, Cardenas said.

Cardenas, who chairs central bank policy meetings, said the bank’s interest rate decisions will depend on the behavior of inflation and inflation expectations, “without strangling the economy.”

The bank will raise its policy rate for a fifth straight month at its Jan. 29 policy meeting, to 6 percent, according to all 14 analysts surveyed by Bloomberg. Inflation accelerated to 6.77 percent last year, its fastest pace in seven years.

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