- Region: Latin America and the Caribbean
December 19, 2005
- Japan Bank for International Cooperation (JBIC; Governor: Kyosuke Shinozawa) signed on December 16 a set of agreements with the Government of the Republic of Colombia, and Mizuho Corporate Bank as arranger, to provide a guarantee for private placement yen-denominated foreign bonds (Samurai bonds*1) totaling 22.5 billion yen to be issued by the Colombian Government. JBIC will provide a guarantee on the principal and a part of the interest.
- The Government has issued yen-denominated foreign bonds five times in the Tokyo market since 1986. However, since its last issuance in April 2001, the credibility of Latin American countries has declined due to unfortunate occurrences such as the default of the sovereign bonds of Argentina. Nevertheless, the credit enhancement achieved with JBIC's provision of this guarantee has opened the way for the Government to return to the Tokyo market.
- The proceeds of the bonds will finance projects planned by the Government to increase direct investment from overseas, including investments aimed at developing transport infrastructure, small- and medium-sized enterprises (SMEs) and supporting industries. In addition, such investments will be used for improving the domestic security situation, which poses a major obstacle to increasing direct investment in Colombia. Implementing these projects will improve the business environment for locally operating foreign businesses, including Japanese affiliates, and will thereby raise the prospects for a further increase in Japanese firms expanding their operations into Colombia.
- This is the third guarantee JBIC will provide for public sector bonds, following guarantees for private placement yen-denominated foreign bonds by Philippine National Oil Company-Energy Development Corporation and Korean Collateralized Bond Obligation (CBO). This is also the first guarantee provided for a non-Asian issuer. It is expected that JBIC's support of the issue of yen-denominated foreign bonds in the Tokyo market will help create business opportunities for Japanese financial institutions and will also invigorate the yen-denominated foreign bond market. By making use of its guarantee facility, JBIC is committed to supporting governments and other public entities in developing countries for issuing public sector bonds in the Tokyo market, while helping Japanese firms issue corporate bonds in local currencies in Asian financial markets.