Colombia Group Urges Easing Local Bond Rules as Sales Drop 40%

  • Group publishes recommendations for local corporate market
  • Proposal seeks to attract new issuers, increase liquidity

Colombia should seek to grow its market for local corporate debt by attracting riskier issuers and easing rules on the kinds of securities public pension funds can invest in, according to report published by a group of local brokers and bankers.

The group, which also includes stock exchange officials and calls itself “Private Debt Visionaries,” published recommendations for Colombia’s corporate debt market to add issuers, including smaller companies and debt rated lower than AAA or AA+ on the local scale. It also suggested changing pension fund Fonpet’s guidelines to allow investment in corporate notes, according to a copy of the report distributed by the stock exchange.

Colombian companies issued 5.9 trillion pesos ($1.8 billion) of local fixed-income securities last year, down 41 percent from 2014, according to data from the stock exchange. The group recommended revising fees for smaller debt sales, reviewing the amount of time it takes for issuance to be approved by regulators and requiring less information on bond prospectuses.

Last year, there were no sales for securities rated lower than AA+, which is the second-highest investment-grade classification.

The group is seeking “to convert the market into a real financial tool for those companies that today depend exclusively on bank lending, which in the end affects their competitiveness,” the statement said. To boost corporate debt supply, the group recommends “identifying restrictions that arise along the value chain that hinder issuance in the market for riskier assets, with ratings lower than AA+.”

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