The Treasury reported that the country made use of the currency conversion clauses available in the loan contracts with the Inter-American Development Bank (IDB) to convert, at a fixed rate in Colombian pesos (COP), three multilateral loans for US$341 million, maturing in 2033, 2037 and 2040.
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According to the portfolio, this operation reduces the exchange risk of the portfolio of external public debt under favorable conditions and, thus, the portion of public debt denominated in foreign currency is reduced from 39.9% to 39.6%.
These loans were converted at a weighted average interest rate of 8.31%, 135 basis points below the rate of the comparable TES title. The weighted average exchange rate at which the credits were converted is 3,800 pesos per dollar, 93 pesos below the TRM average for Monday, March 14.
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The Minister of Finance and Public Credit, José Manuel Restrepo, highlighted the exchange conversion program as “an important tool within the Nation’s debt management strategy, especially taking into account that this instrument allows reducing exposure to fluctuations in the exchange rate, which have been accentuating recently as a consequence of the high volatility in the international capital markets”.
Likewise, the general director of Public Credit and National Treasury, César Arias, highlighted the magnitude of the third round of foreign exchange hedging, with which an accumulated US$748 million in credits with multilaterals converted to pesos.
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According to Arias, by 2022 the share of issues in Colombian pesos will be increased, which contributes to the effort to ‘pesify’ the country’s debt.
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