Colombia Has Converted 1,055 Million Dollars of Credits to Pesos

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The Ministry of Finance and Public Credit reported that the country’s foreign exchange hedging program already accumulates 1,055 million dollars in multilateral credits converted to pesos, thanks to the fact that Colombia recently made use of the currency conversion clauses available in the loan contracts with the Inter-American Development Bank (IDB).

For this operation, a multilateral loan for 306 million dollars, maturing in 2033, was converted into a fixed rate in Colombian pesos (COP), successfully culminating in the fourth round of foreign exchange hedging. This operation is expected to reduce the foreign exchange risk of the external public debt portfolio under favorable conditions.

Thus, the portion of public debt denominated in foreign currency was reduced from 38.4% to 38%.

Said loan was converted at a weighted average interest rate of 7.46%, 223 basis points below the rate of the comparable TES title. As for the exchange rate at which the credit was converted, it was $3,798.90 (COP) per dollar, 40 pesos below the average TRM of the last month.

The Minister of Finance, José Manuel Restrepo, highlighted that the exchange hedging program allows for improving the composition of the currency and reducing the exposure of the Nation’s debt portfolio to fluctuations in the exchange rate, which have increased in the context of the pandemic and the recent volatility in international capital markets.

For his part, César Arias, general director of Public Credit and the National Treasury, said that efforts to ‘pacify’ Colombia’s public debt will continue.

“ We will increase the issue in Colombian pesos, which went from representing 50% of the total in 2020 to 60% in 2021 and a target of 70% in 2022 ”, said Arias.

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