In Colombia, IFC has played a pioneering role in developing local capital markets and the microfinance and housing finance sectors. We have also advised local companies on ways to improve their corporate governance and become more competitive, positioning them to expand within the region and internationally. Many approaches developed in Colombia have been replicated across Latin America and worldwide.
Since the early 1990s, IFC has been playing a key role in helping shape a more efficient capital market in Colombia and in developing a sound regulatory framework. We have worked closely with the local government and the private sector and in collaboration with the World Bank.
Supporting Housing Finance
In 2001, IFC and local financial partners sponsored the creation of Colombia's first secondary mortgage company, Titularizadora de Colombia, to acquire and securitize residential mortgage loans. This followed an extensive restructuring of the country's mortgage business, as mandated by a new, modern legal framework that IFC had helped set up.
Titularizadora's operations have deepened the liquidity of the mortgage market, while offering a standardized, high-quality set of mortgage backed securities that more accurately match the long-term requirements of the nation's pension funds and other institutional investors. Titularizadora's mortgage activity has helped give families more and better possibilities to buy a home; it also stimulates the construction industry and more broadly promotes economic and social development. IFC has continued to provide financial and advisory support.
Local Currency Financing
IFC worked with the Colombian authorities to prepare the March 2002 launch of the El Dorado bond issue, which amounted to 225 billion pesos (about $100 million). IFC was the first international institution to issue a Colombian peso bond; this was also our first bond issue in a Latin American currency. The transaction provided a benchmark for future high-grade issuers and supported Colombia's efforts to provide access to local currency and longer-term fixed-rate funding to local companies.
In December 2002, IFC reopened its El Dorado bond with an issue of 125 billion Colombian pesos (about $45 million). IFC has continued its loan and equity investments in Colombia, while providing more local currency instruments through partial credit guarantees and risk hedging intermediation.
Helping Financial Institutions Evolve
In January 2003, IFC provided a partial credit guarantee of 300 million UVR to Colombia's leading mortgage originator, Banco Davivienda, to facilitate a domestic subordinated bond issue of 1 billion UVR.* The goal was to bolster Davivienda's capital base and help the bank expand, including through diversification into non-mortgage areas of business where more capital is required.
Our transaction with Davivienda showcased the evolution of the Colombian mortgage market, with former savings and loans institutions shifting their focus from financing mortgages to origination and securitization, and transforming themselves into universal banks.
Improving Corporate Governance
IFC has collaborated with the OECD to improve corporate governance in Colombia and throughout Latin America. From our perspective, better corporate governance practices are essential to building greater public confidence in the securities market. We have helped improve governance at several of our client companies in the country, as well as sponsored training for high-level executives in coordination with the local Chamber of Industry and Commerce, Confecamaras.
For more information contact:
Adriana Gomez
Communications Officer
Washington, D.C.
E-mail: agomez@ifc.org
Phone: 202-458-5204
Roberto Albisetti
Country Manager, Colombia
Bogotá, Colombia
E-mail: ralbisetti@ifc.org
* UVR is unidad de valor real, a national currency that reflects the inflation-adjusted Colombian peso.
Published October 31, 2006
