Corporate Debt Restructuring Masterclass

18 July 2022 (Mon), 5pm Singapore/HK time

Colombia’s dollar bonds slipped over the weekend on growing fears among investors that the South American nation may lose its coveted investment grade credit rating, sparked by the government’s warning of deteriorating financial health. Its 3.125% 2031s and 4.125% 2051s fell to its lowest levels in over a year to currently trade at 98.07 and 94.28, yielding 3.35% and 4.47% respectively. The sovereign’s 2021 fiscal deficit forecast came in well above market expectations, up 8.6% from previous predictions of 7.6%. Colombia is currently rated BBB-, with a downgrade warning, by both S&P Global and Fitch, which last week warned that its rating was under threat if there was a “failure to take structural fiscal measures” or a tax package, such as the government’s “heavily watered down” plans to cut down VAT exemptions. “Colombia may risk losing its investment-grade status over President (Ivan) Duque’s tax reform package,” said an analyst at Citi.

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