Colombia Won’t Sell More Bonds Overseas in 2.011, Echeverry Says

Colombia will abandon plans to sell $240 million in international bonds this year as global financial turmoil raises the risk of borrowing abroad, Finance Minister Juan Carlos Echeverry said.

Colombia planned to raise the additional amount after selling $2 billion of 10-year dollar bonds overseas in July and has said that it could issue Samurai bonds in Asia in the second half of the year. 

Under its 2.011 financing plan, Colombia planned to raise $2.24 billion in debt sales abroad.

“We don’t like wild waters,” Echeverry said in an interview in Washington, where he’s attending the meetings of the International Monetary Fund. 

“We were lucky and very successful when we placed $2 billion in a 10-year bond and we don’t need more financing, so why tackle the markets now?”

The worsening European debt crisis and threat of a U.S. recession have erased about $12 trillion from global equities since the beginning of May. 

Central banks around the world have slashed interest rates to record lows and embarked on bond purchase programs, trying to kick-start the economy.

Colombia’s sale of the dollar bonds in July was the nation’s first international debt sale since winning an investment-grade rating in March. 

The country sold the 4.375 percent bonds due 2021 to yield 130 basis points, or 1.3 percentage points, more than similar-maturity U.S. Treasuries. 

Since Aug. 31, the yield on the bonds has risen 43 basis points to 4.127 percent.

‘Happy’ With Peso

Echeverry, echoing the comments in Washington of central bank Governor Jose Dario Uribe, said he’s “happy” with the current exchange rate after the peso declined against the U.S. dollar since the end of July.

“Right now, the current level, I am happy with that,” Echeverry said. 

“Something around 1900 is ok.”

The peso weakened 4 percent to 1903.94 per dollar this week as investors dumped emerging market assets on signs the world recovery was faltering. 

Even after the recent decline the peso remains the only major currency in Latin America except Peru’s sol to have gained ground on the greenback this year.

Echeverry said the past strengthening of the peso was a result of loose U.S. monetary policy that is “unsustainable.”

The Finance Minister said he is sticking by his forecast for Colombia to grow 5 percent next year, and will focus on maintaining confidence in South America’s fourth-biggest economy so that credit can continue to flow.

“Colombian fundamentals are very solid,” he said. 

“The critical issue is to try to tackle especially bankers’ expectations, because their provision of credit will determine what happens next year.”

While the fallout from the European debt crisis could affect growth in emerging markets, Echeverry has borrowed for his presentations to investors an image from the 2.000 movie “The Gladiator,” starring Russell Crowe, to emphasize his nation’s preparedness for the worst.

“We don’t know what could come out of the Greek and Euro gate dragons or lions or whatever,” Echeverry said. 

“We will survive if we are together.”