Emerging Markets Back in Demand May Fuel Colombia Road Bond Sale

  • Consortium of builders hired Goldman Sachs to arrange meetings
  • Road bonds sold in February have rallied, pushing down yields

Colombia’s $17 billion plan to rebuild its shoddy roads may get a boost from resurgent demand for emerging-market assets.

A consortium of builders hired Goldman Sachs Group Inc. to arrange meetings with investors this week as it considers selling bonds or obtaining bank financing, Clemente del Valle, the head of Colombia’s development bank, said from London. In February, a different group that includes some of the same builders sold $260.4 million of notes abroad in the first offering aimed at financing Colombia’s so-called 4G infrastructure projects. Yields on the bonds fell 0.6 percentage point since they were issued to 7.94 percent.

Colombia is counting on international financing to help repair and expand highways considered among the worst in the world. In a report from the World Economic Forum released last year, the quality of the nation’s roads ranked 126 out of 140 countries. The consortium meeting with investors this week is seeking funding to build and improve 150 kilometers (90 miles) of highways linking the coastal cites of Barranquilla and Cartagena.

“There’s demand to sell bonds right now,” said Cesar Sanchez, the vice president of fixed-income sales at broker Ultralat in Miami. “The type of issuance is for real-money accounts that want exposure to Colombia’s infrastructure sector, which didn’t exist for overseas bond investors before.”

The yield on Colombia’s dollar bonds due 2021 has dropped from a high of 4.88 percent in January to 3.35 percent at 10:45 a.m. in New York trading.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE