Bancolombia to Devote 10% of Assets to Santos’s Highway Plan

Bancolombia SA, Colombia’s largest bank, said it’s in talks with the government to resolve hurdles for financing the country’s $25 billion highway program, with plans eventually to devote 10 percent of assets to the projects.

Loans to the highway builders and securities tied to President Juan Manuel Santos’s infrastructure program will account for about 10 percent of assets over the next three to four years, Chief Financial Officer Jose Humberto Acosta said on a conference call today. Medellin-based Bancolombia expects the projects to be “materialized” in its loan portfolio at the end of 2015 and “fully reflected” in 2016, Acosta said.

The $68-billion-asset bank’s ongoing concerns with the program’s financing conditions signals that an expected boom in infrastructure construction could be delayed, according to Jose Restrepo, an equity strategist at brokerage Serfinco SA. The first three projects in the program each attracted at most two bidders out of initial pools of 10, partly because of difficulties by builders in lining up financing.

“There are still issues that haven’t been resolved in the financing of the program,” Restrepo said in a telephone interview. “There’s something that hasn’t been right in the structure, which explains why you’re not getting all the bidders.”

The country has forced bidders to line up their own financing after stopping its prior practice of making upfront payments, which had led to allegations of corruption and inefficiency. The program is known as 4G for “fourth generation.”

Some of the project loans would be refinanced in the bond market, Acosta said.

“You will see the 4G projects in the balance sheet of the bank in different ways,” Acosta said. “First as a bridge, then as a long-term loan and finally as debt capital markets.”

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