Is the debt a time bomb for Colombia? This they say from the market

In the midst of a tight fiscal situation and a more expensive financing scenario for the Government, Treasury Titles (TES) are still in the center of economic conversation; While the question, recurring in forums and networks, is whether the public debt in this instrument has become A “time bomb” that, to explode, would put against the ropes to the country’s finances.

Not surprisingly, from the Ministry of Finance they have pressed this financing line to fatigue, even raising risk premiums and with it, the interests of the debt that the country is acquiring at the local level. All this in order to deal with the cash crisis that has come from 2023, when tax collection projections were overestimated.

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In order to know how this line is foundPortfolio spoke with Federico Torres, vice president of Sales for Latin America of Global X ETFS Colombia, for whom the response is more nuanced, since its diagnosis is based on the fact that the country lives a complex fiscal moment, but is far from an extreme scenario.

A real time thermometer

In talk with this medium, he said that the background photo is not simple and remembers that Colombia faces a fiscal deficit that forces the government to seek resources in the market, paying higher rates; Situation that responds to the natural dynamics of any issuer in which investors are willing to provide if they receive compensation according to risk and the country’s economic conditions.

“It is bad for the country because financing is more expensive, but good for the investor, who receives a greater return,” summarizes; while noting that the equation is clear, Since higher rates attract buyers, even if the macroeconomic context is under pressure.

However, it warns that this balance is sustained only while discipline in debt management and puts on the table that “this is true until it ceases to be”, referring to a loss of confidence could raise the risk to unsustainable levels.

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History that supports

In his analysis, Torres remembers that there is an intangible but crucial asset and is the tradition From Colombia to honor his debts, stressing that “he has never made a non -payment event”, so that reputation has been key to maintaining access to markets, even in more demanding conditions.

That compliance history, he says, is one of the reasons why Colombian public debt is seen as one of the most reliable in Latin America. And it emphasizes that, for now, there are no signs that this line is broken.

Federico Torres, Vice President of Sales for Latin America of Global X ETFS

Courtesy – API

It should be noted that Torres does not speak only from the theory, since the firm in which it works operates one of the few mechanisms in the country that allows following the pulse of the Tes market in real time. It is of an indicator that reflects in real time, how the treasury titles are being behaved.

“The tool takes as reference a background that replicates a good part of the fixed rate curve and that is negotiated in the stock exchange as if it were an action. The result is an immediate photograph of itself, in the day, these papers are improving or worsening their yields,” he said.

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According to Torres, this follow -up is not common to the general public, because traditionally Only professional actors with access to the wholesale market could closely monitor the evolution of public debt. Today, the information is available for any investor, large or small.

Is there a time bomb?

The question about a possible bubble or “time bomb” in the tes is not new, but the spokesman of Global X ETFS discards it flat, stating that “we are far from thinking about an extreme situation” and its judgment, what is lived today is an episode of a difficult economic cycle, in which technical expertise is required to administer the debt.

Treasury titles have helped the government achieve resources through local debt.

Chatgpt image

Part of that management, he explains, is in the hands of the Public Credit Directorate, which has taken measures to relieve pressure. Among them, opt for short -term emissions that allow better distributing loads and preventing them from concentrating in the long term; While the risk, he acknowledges, exists if imbalances such as the deficit are not corrected, But there is no indications that the country is in a trajectory of imminent collapse.

On the other hand, in the radar of international investors, the appetite for Colombian tes is at one of its lowest points in recent years. However, Torres clarifies that this does not mean that there is a total rejection and replicates that the interest could rebound if changes in the fiscal panorama or signs are perceived that structural problems are addressed.

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Likewise, he stressed that while until recently, talk about tes was to refer to a market reserved for large institutional players such as pension funds, foreign investors or state entities that administered surpluses of liquidity; That has changed and the market has turned towards a more democratized environment.

“Today, with a couple of clicks and an account on a enabled platform, it is possible to invest from $ 54,000 in a diversified portfolio of tees. This does not eliminate the long -term nature that this type of investment must have, but it does break the access barrier.” explained.

Treasury titles have helped the government achieve resources through local debt.

Chatgpt image

In your vision, direct access to this type of instruments is a step towards financial inclusion; since the possibility that more people participate in state financing not only diversifies the Investor base, but also reduces the dependence of a few institutional actors.

In this way, he concluded that the diagnosis is clear and that is not a time bomb, but a structural challenge that requires constant attention and in which to maintain the reputation of good payer, control the deficit and manage the debt deadlines well are the pieces that support market confidence.

Daniel Hernández Naranjo
Portfolio journalist