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| 3/19/2009 12:00:00 AM

Investor confidence in Colombia

In the middle of an economic crisis in which liquidity is scarce worldwide, Colombian businesses haven’t had problems financing themselves. This year a record amount of debt has been issued.

In the United States and in Europe, businesses that need resources in order to finance their operations are having trouble obtaining them. Banks in almost all parts of the world closed the credit flow because they don’t have liquidity and investors lack confidence. Investors are only interested in U.S. treasury bonds or private debt that has very little risk. Without a doubt, confidence is a scare commodity.

Surprisingly, that isn’t the outlook in Colombia. The bank credit system is open. It is growing at 17 percent annually and the capital market has abundant liquidity, and investors are looking for opportunities to allocate their resources.

Analysts are stunned by the way the Colombian capital market has reacted in this time of crisis in the world. So far in 2009, local businesses have received, via new bond issuance, funds for more than three trillion pesos ($1.2 billion USD), for working capital or investment purposes. The figure is a record for the country.

What is most striking is that the new issues between January and March (bonds and commercial financing) were literally devoured by investors, who are avid in finding where they can invest their money.

Several companies, including EPM, Davivienda, Alpina, Emgesa, Bancoldex, Bancolombia and Argos, faced a favorable scenario in which the issues were oversubscribed three and four times. This spurred other companies to prepare their own issues.

Whoever has wanted to seek financing in any sector has found it without much difficulty. Last Wednesday, the Financiera de Desarrollo Territorial (Findeter) raised 415.7 billion pesos ($168 million USD) through certificates of deposit but the investors had more appetite. A day later, La Titularizadora Colombiana issued papers for 500 billion pesos ($201 million USD) and there was also an enormous appetite in the market.

“What we are seeing is excellent news. Colombia is one of the few countries where liquidity is flowing and the productive sector isn’t experiencing problems in its financing,” says the president of the Colombian Stock Exchange, Juan Pablo Córdoba.
For the president of Valores Bancolombia, Emilio Echavarría, the success that private issues have had shows that investors, whether they are pension funds or individuals, believe in Colombian businesses, know that they are well-managed, had good results last year and paid attractive dividends. That is why the money that they invested there is safe.

In effect, with what is happening abroad, Colombian investors are finding a good refuge in the local market, with attractive rates and, in any case, better security than on Wall Street.

The businessmen are also managing the situation very well. In the midst of the crisis, it is advisable to have enough cash in case the situation worsens.

According to the analyst Alberto Bernal, of the stock brokerage Bulltick Capital Markets in New York, what he is seeing in Colombia, in contrast to the rest of the world, is that the local financial market is not undergoing stress and that is why it hasn’t stopped the flow of credit.

A telling detail is the way in which the market is behaving in Colombia that in the midst of private demand for resources, the government has also had room to finance its expenditures. In fact, in two months, already 32 percent of the total resources of the government’s debt needs projected for 2009 have been assured.

Apparently, in Colombia the crisis hasn’t affected, at least not yet, the available funding for economic activity. That is good news and for many, what it means is that in the country there is still confidence and in the economy, that is key.

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EDICIÓN 1844

PORTADA

Francisco superstar

La esperada visita del papa a Colombia tiene tres dimensiones: una religiosa, una política y otra social. ¿Qué puede esperarse de la peregrinación del sumo pontífice?