Colombia Joins Record Latin American Borrowing Spree in Eurosby and
Sold 10-Year euro bond at 3.875%; 356bps over Feb. 2026 Bunds
Peru, Mexico and Chile all sold debt in euros as yields fall
Colombia became the fourth Latin America country this year to take advantage of lower borrowing costs in Europe by selling debt denominated in the single currency, helping push euro bond sales from the region to a record 10.8 billion euros in the first quarter.
Colombia sold 1.35 billion euros ($1.5 billion) of 10-year bonds to yield 3.875 percent. That’s down from initial price talk of 4.125 percent, according to a person familiar with the matter, who asked not to be identified because he isn’t authorized to speak publicly on the matter. Colombia will have the the right to call the bond at par at any time after December 2025, three months before the March 2026 maturity date, according to data compiled by Bloomberg.
Colombian Finance Minister Mauricio Cardenas said last week that he saw a “great opportunity” in the European bond market, which offered attractive interest rates and liquidity. He visited investors in London and Germany earlier this month ahead of Colombia’s first euro bond sale since 2001. Yields on benchmark German government notes fell to record lows at the end of February as slowing inflation fueled expectations of expanded central bank stimulus.
“Timing is better today than in January or February, which marked the worst start of the year ever,” said Lutz Roehmeyer, director at Landesbank Berlin Investment GmbH, who bid for the bonds. “We have a better mood, now as markets went up. We have the ECB out the way and the oil price recovered. The basic factor is desperate hunt for yield in the eurozone, that’s why they issued in euros instead of dollars.”
Colombia’s $1.5 billion of dollar bonds due in January 2026 pay an ask yield of about 4.61 percent, the equivalent of a yield in euros of 2.71 percent.
Germany’s 10-year bund yield slid 0.005 percentage point on Wednesday to 0.311 percent. The yield is little changed since March 10, when European Central Bank President Mario Draghi announced an expansion of stimulus and signaled that there will be no further interest rate cuts. The extra yield, or spread, the bonds pay over Bunds was 3.56 percentage points. Its dollar bonds pay a spread to Treasuries of 2.67 percentage points.
Colombia follows other Latin American countries taking advantage of reduced borrowing costs resulting from European Central Bank bond purchases, with a combined 4.7 billion euros in sales by Chile, Mexico, and Peru. Mexican companies including Petroleos Mexicanos and America Movil SAB have also sold debt in euros this month.
Colombia last sold dollar bonds in September, issuing the 2026 dollar notes to finance half of the $3 billion in bond sales planned for this year. The euro bond sale completes its overseas bond plan for 2016.
“We no longer have any financing needs,” President Juan Manuel Santos said in a statement distributed by his press office.
Banco Bilbao Vizcaya Argentaria SA, Goldman Sachs Group Inc. and JPMorgan Chase & Co. managed the sale.