Surprise surprise

COLOMBIA - In Brief 21 Dec 2025 by Andrés Escobar Arango

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Acrimony will probably surface in the next meeting of market creators with Minfin’s Public Credit director. On Friday, December 19th, there was a secretive $6 billion financing operation with an unknown funding source at an interest rate of 13.5%. This caught both the market makers and the market at large by surprise. In private conversations, people are expressing their disgust: “The way [the Direction of Public Credit] is handling Public Debt is unbelievable. What they did completely breaks with the entire framework we have been defending for more than 25 years as market makers, and out of the blue, they issue a targeted bond with a huge premium.” Says an actor in this market. Another person analyzes this operation’s spread vis-à-vis prevailing market conditions in the following fashion: “The 40 basis points of placement premium are equivalent to half a billion COP in upfront profits. That was what they would have been required to pay as a premium to buy it in the market. Another half billion was earned because the bonds appreciated on the news. Another interesting comparison is that the IMF was lending Colombia at 6% in dollars. This was 13.40% in pesos. Finally, this mysterious buyer is now among the top 5 holders of this bond, with the apparent‘promise’ that they won't sell prematurely.” More uncertainty arises from the fact that Mr. Cuellar’s creativity appears not to be over. He promised that more may follow. “The market may have appreciated on Friday, Dec. 19th, but the door is open for this to keep happening, with market participants defending rates that are not sustainable in the long term, and also destroying price discovery, not to mention the fiscal implic...