Bancolombia sells US$520mn in senior unsecured bonds to boost corporate credit

Thursday, January 6, 2011

Colombia's largest bank, Bancolombia (NYSE: CIB), sold US$520mn worth of five-year senior unsecured notes in international markets, the proceeds of which will be used to expand its supply of corporate credit.

In total, 119 international investors participated in the issue, and demand hit US$1.6bn. The senior notes were sold at 230 basis points above US treasury bonds and carry a fixed interest rate of 4.25%, according to a release from the bank.

Proceeds from the issuance will be used to increase Bancolombia's US dollar-denominated corporate credit offer, which has seen a 15% increase in demand in the country, said Jaime Velasquez, the company's financial VP, according to local financial daily Portafolio.

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Fitch assigned an initial BBB- long-term foreign currency rating, but contingent upon the receipt of final documents conforming to information received previously.

According to the agency, the notes will rank pari passu with all of the bank's other present and future unsecured and unsubordinated liabilities and will rank senior to Bancolombia's existing and future subordinated debt. The assigned rating is at the same level as the bank's long-term foreign currency issuer default rating assigned by the agency.

Ratings agency Moody's, for its part, assigned a Baa3 long-term foreign currency debt rating on the issuance, with a positive outlook, the agency said in a press release.

The ratings assigned are in line with Bancolombia's Baa2 global local currency deposit rating and constrained by Colombia's Baa3 foreign currency country ceiling.

To read Fitch's press release in English, go to this link

To read the Moody's' press release in English, go to this link

To read the Moody's' press release in Spanish, go to this link