Colombia Eyes Longer-Dated TES Tenor as 10-Year Obligations Grow

(Bloomberg) -- Colombia is likely to issue local peso bonds with longer maturities to avoid having too much debt due its 2033 benchmark, according to a top finance ministry official.

The treasury has recently carried out a series of swaps to ease its short-term obligations. But that’s led to a concentration of local peso bonds, or TES, due around 10-years from now, Public Credit Director Jose Roberto Acosta, said in an interview.

Because of this, the government is considering creating a new tenor of TES, Acosta said, without elaborating on when the securities would mature. The Treasury will consider creating the new maturity once the July 2024 note has expired, he added.  

“We have thought about it because the 2033 bond pile is starting to go up,” Acosta said Tuesday, in an interview in his Bogota office. 

Colombia has about 46 trillion pesos ($11.8 billion) of bonds maturing over the next two years. Casa de Bolsa SA, a Bogota based brokerage, said in a report that the series of swaps will contribute to the steepening of the local yield curve, whereby long-term borrowing costs rise relative to short-term rates. 

Fiscal Rule

During a trip to New York earlier this month, Acosta assured investors that Colombia will do all it can to comply with its fiscal rule, or balance-budget act, despite weak tax revenue. 

The Andean nation is willing to cut spending if it fails to raise around $2.5 billion expected this year from litigation with companies that have liabilities with the tax authority, he said. 

Acosta said Colombia wants to ensure that public investment is a priority, to ensure future growth.

“We are going to the limit with the fiscal rule, but as a bet, a necessary condition is to grow through public investment,” he said. 

Colombia’s fiscal deficit is expected to widen to 5.3% of gross domestic product this year from 4.2% in 2023, according to the finance ministry. Excluding the pandemic, that would be the widest this century. 

Read more: Colombia Rally Fizzles as Fiscal Worries Leave Bonds in Limbo

Acosta said he expects the launch of a Colombian exchange traded fund in the first half of this year. The fund, managed by Global X ETFs, will hold a basket of 12 local bonds, weighted by liquidity, and will become a key reference indicator for the economy, he said. 

The country has been working on the fund since 2019, and in 2021 it signed an agreement with the World Bank to develop it.

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