By Nelson Bocanegra
Dec 30 (Reuters) - Major financial institutions which are key players in the buying and selling of Colombia's public debt have voiced strong concerns to the government over recent off-market debt operations.
A letter sent to the finance ministry and seen by Reuters on Tuesday reveals the apprehension of 14 so-called "market makers," including major financial institutions like JPMorgan, Cibest, Santander, and Colombian banks like Banco de Bogota and Banco de Occidente.
The groups
caution that recent debt operations could lead to a "moral sanction" from investors, potentially undermining confidence in the country's financial markets, and that debt placements are being executed under conditions that differ significantly from prevailing market rates.
The heightened uncertainty follows the direct sale of 23 trillion pesos (approximately $5.94 billion) in TES public debt bonds to a foreign investor on December 19. That operation, intended to pre-finance 2026 needs, was announced by the finance ministry's public credit director Javier Cuellar in an interview with Reuters, where he added that "many" such operations are planned for 2026.
This shift in strategy was unexpected and could alter how both local and international investors perceive the strength and transparency of Colombia's market maker framework and its capital markets as a whole, the letter said.
The institutions specifically highlighted worries about operations conducted "significantly outside the transactional curve," which they said distorts price benchmarks, compromises the consistency of the issuance process, and erodes investor confidence in price formation.
Neither the finance ministry nor the public credit directorate immediately responded to Reuters' request for comment.
TES bonds are Colombia's second-largest source of domestic funding for public expenditure, following tax revenue. The government's decision to suspend a fiscal rule for three years to increase its deficit target has already led to credit rating downgrades from agencies like Moody's and S&P, with Fitch joining them this month.
(Reporting by Nelson Bocanegra, Editing by William Maclean)
