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IFC Launches El Dorado II Bond Offering in Colombia


Adriana Gomez
Phone:  (202) 458-5204

Fax:(202) 974-4384

E-mail:
agomez@ifc.org


Washington, D.C., December 19, 2002—The International Finance Corporation (IFC), the private sector arm of the World Bank Group, today reopened its domestic Colombian peso (COP) “El Dorado” bond issue originally launched in March this year. The reopening was for an amount of COP 125 billion (approximately US$45 million equivalent), which brings the total outstanding amount of this transaction up to COP 350 billion.

El Dorado bond issues I and II are considered a benchmark as they represent the first domestic bond offerings in a Latin American currency by a supranational, and are the first Colombian peso bond offerings by a foreign entity. They also represent the inaugural Latin American currency bond issue for IFC. These transactions continue to provide a benchmark for future high-grade issuers and serve to deepen the Colombian domestic capital markets.


The arranger of the transaction is BNP Paribas, the lead manager is the Corporacion Financiera Nacional y Suramericana S.A.(Corfinsura) and the syndicate comprises of a group of premier Colombian institutions.


The new domestic bonds carry a 13.70 percent coupon and a maturity date in March 2007. “We are very excited that this transaction was so successful. The bonds were offered through a Dutch auction mechanism, and as the final order book issue was six times oversubscribed with more than 70 orders from investors, we were able to price the increase around 170 bp through government debt (TES 2007),” said John Groesbeek, Senior Financial Officer at IFC. The proceeds of the issue were swapped into floating rate US dollar funds; he added that “the end-beneficiary of the swap is a Colombian entity, which was able to hedge its foreign currency liabilities.”


IFC has been working closely with the Colombian authorities to prepare for these transactions. By launching these “El Dorado” bond issues, IFC is showing its continued support to the Republic of Colombia. A developed domestic bond market can provide long-term, local currency, fixed rate funding and ease the risky reliance on foreign currency funding. Nina Shapiro, IFC’s Treasurer, said: “These El Dorado issues represent IFC’s commitment to help client countries develop their domestic markets and the critical access to local currency and longer term fixed rate funding. There is capacity in Colombia’s financial institutions and investors to support the further development of the market and we expect other local and international borrowers to follow our initiative. IFC intends to continue its loan and equity investments in Colombia, and to provide additional local currency instruments through partial credit guarantees, securitizations and risk hedging intermediation.”


IFC has been providing technical assistance to the government and the private sector in Colombia, to help shape a more efficient capital market and to develop a more efficient regulatory framework. The Colombian pension fund system is now highly developed and the former three regional bourses have now been consolidated into a single exchange in Bogotá, providing greater transparency and boosted volume. A stronger and effective capital market will also support Colombia’s efforts to develop a corporate governance culture which will enhance investor confidence.


A sound financial market will support Colombia’s efforts to attain its economic goals” said Bernard Pasquier, IFC’s director of the Latin America and Caribbean department. Mr. Pasquier added: “IFC supports the development of strong capital markets in Latin America to bring benefits for economic growth, and to help reduce the vulnerability of the region’s financial systems to external shocks.”


IFC funds its lending activities by issuing bonds in the international capital markets.  The Corporation’s securities, which are rated Aaa by Moody’s and AAA by S&P, have been issued in 29 different currencies. IFC’s funding program for fiscal year 2003 is around US$3.5 billion. IFC has been the first, or among the first, nonresidents to issue in many currencies including Spanish pesetas, Portuguese escudos, Greek drachmae, Hong Kong dollars and Singapore dollars in the domestic markets, and in Czech koruna, Polish zloty and Israeli shekel in the eurobond markets.


IFC’s mission (
www.ifc.org) is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people's lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, and provides technical assistance and advice to governments and businesses. Since its founding in 1956 through the close of the last fiscal year on June 30, 2001, IFC committed more than $31 billion of its own funds and arranged $20 billion in syndications for 2,636 companies in 140 developing countries. IFC’s committed portfolio at the end of FY01 was $14.3 billion.