Washington, DC/ Bogota, June 21, 2006–
The International Finance Corporation, the private sector arm of the World Bank Group, will provide a partial credit guarantee of up to 69 billion Colombian pesos to Interbolsa on its inaugural bond issue of COP 230 billion.
The proceeds of the bond issue will help the company reduce its reliance on commercial bank funding, which is needed on a daily basis to settle its trading positions. It will also free up a significant portion of Interbolsa’s equity that is currently used for settlement purposes and redeploy it for underwriting other products and services, notably private corporate bonds.
In addition, IFC will sign an agreement to purchase equity shares in Interbolsa for a total investment of $10 million, representing a shareholding of up to 8 percent. The equity investment will also give IFC the right to have a seat on the company’s board of directors.
This operation is part of a broader IFC and World Bank program to help broaden and deepen Colombia’s domestic securities markets, enabling them to make a greater contribution to the country’s growing needs for housing, infrastructure, and general private sector development.
Atul Mehta, IFC’s Director for Latin America and the Caribbean,, said, “For IFC, the transaction with Interbolsa is in line with our strategy of broadening the financial markets in Colombia, revitalizing the private sector, and improving access to finance through development of capital markets. The issuance of the bond by Interbolsa will greatly improve market liquidity and activity in the domestic government securities markets, which is critical in enabling a nongovernment bond market to emerge, and necessary for financing housing, infrastructure, and private-corporate operations.”
Today, the Colombian government bond market faces several constraints, including limited funding that comes primarily from short-term bank debt, and a settlement process that requires independent dealers and other market participants to maintain significant liquidity to settle their daily trading positions. Interbolsa will be the first securities dealer in Colombia to issue a bond under new regulations put in place by Superintendencia Financiera, the country regulatory agency. The proceeds of this bond will help ensure that Interbolsa can meet its settlement obligations without having to liquidate its investment holdings in government bonds, thereby minimizing market disruptions and providing overall price stability in the market. Interbolsa will also be well positioned to capitalize on its regional network and strength as nearby countries see growth in their securities markets.
“We are delighted that our relationship with IFC has helped us be the first securities dealer in Colombia to issue a bond under the new guidelines established by Superfinanciera,” added Rodrigo Jaramillo, CEO of Interbolsa. “We are starting on a long road toward growth, both domestically and in the region, and with IFC by our side, as guarantors of the bond and more importantly as shareholders, we are confident that we can achieve our objectives and remain a dominant market player for years to come.”
IFC in Colombia
IFC’s total portfolio in Colombia was $280 million as of June 2005. Since 1956, when Colombia joined IFC, the Corporation has provided $1.4 billion, including syndications, for 58 companies in the country.
The financial sector is one of IFC’s priorities in Colombia, with special emphasis on supporting housing finance and microfinance, as well as strengthening local capital markets and improving corporate governance. IFC’s strategy includes also increasing support to sectors that are strategic for economic growth in the context of free trade agreements, such as infrastructure projects, port expansions, road and airport concessions, and support to companies in the logistics services sector.
About Interbolsa
Interbolsa was established in 1990 in Medellin, as a member of the stock exchange. It was incorporated 10 years ago as Comisionista de Bolsa, Colombia’s first independent brokerage company, specializing in fixed income and equities trading. By 2000, the company rose to the top rank of market traders and received authorization from regulatory authorities to be the country’s first independent participant (not affiliated with a bank) in the “market maker” program. Since then, the company has become a strong regional player, expanded its product offering, and, through significant investment in information technology, has become one of the leading full service brokerage companies in Colombia today, with wide national coverage. Interbolsa is currently the second market maker in government bonds, after Bancolombia S.A, with a market share of approximately 30 percent as of end-2005. It has a short term counterparty risk rating of AA with a positive outlook from BCR, a local ratings agency.
About IFC
The International Finance Corporation is the private sector arm of the World Bank Group and is headquartered in Washington, D.C. IFC coordinates its activities with the other institutions of the World Bank Group but is legally and financially independent. Its 178 member countries provide its share capital and collectively determine its policies.
The mission of IFC is to promote sustainable private sector investment in developing and transition countries, helping to reduce poverty and improve people’s lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. From its founding in 1956 through FY05, IFC has committed more than $49 billion of its own funds and arranged $24 billion in syndications for 3,319 companies in 140 developing countries. IFC’s worldwide committed portfolio as of FY05 was $19.3 billion for its own account and $5.3 billion held for participants in loan syndications. For more information, visit
www.ifc.org
.
