Colombia international bonds rise after debt repurchase deal

By Rodrigo Campos and Nelson Bocanegra

NEW YORK/BOGOTA, Sept 5 (Reuters) - Colombia's international dollar bonds rallied on Friday after a group of banks announced the results of a deal to repurchase over $5 billion of debt.

The 2035 issue gained roughly 2 cents to trade at 107.41 cents on the dollar.

Colombia's finance ministry is looking to reduce its debt costs due to a deterioration in the South American nation's public finances, including via debt swaps and repurchases of both foreign and domestic debt.

The banks, including BNP Paribas, Citigroup, Goldman Sachs and JPMorgan, said the aggregate principal amount purchased was $5.44 billion, with an aggregate purchase price of $4.6 billion, indicating a discount over face value. Maturities included 2027 through 2061.

In July, the finance ministry said it was seeking around $10 billion through the operation, though the results would depend on how much debt the current bondholders agreed to sell to the banks. The ministry did not respond to a Friday request for comment on the operation.

The government suspended its fiscal rule for three years, after which it raised its deficit target to 7.1% of gross domestic product (GDP), prompting Moody's and S&P agencies to downgrade the credit rating of Latin America's fourth-largest economy.

This week, the Ministry of Finance presented a tax reform bill to Congress to raise 26.3 trillion pesos (US$6.589 billion) in 2026 to finance that year's spending budget. Analysts believe it will be difficult to approve before the start of the 2026 presidential and legislative election campaigns.