billions of dollars more in reserve
accumulation than the government is
calculating.
The government said it plans to reach
foreign exchange reserves of US$65bn by
2024 and US$77bn by 2030.
)NVESTORSûAREûALSOûCALLINGûFORûMOREûlSCALû
adjustments and using net as opposed to
gross debt to correct what they see as the
government’s one-sided debt sustainability
analysis (DSA).
“They are using their own version of
DSA, which does not look like a typical
DSA [by the International Monetary
&UND= vûTHEûBONDHOLDERûSAIDûh4HEREûISû
some irritation that they are playing by a
different set of rules.”
The government is assuming that real
GDP will shrink but the economy is
expected to grow by 2%-2.5% in 2022 and
by 1.5%-2% from 2023 to 2030.
/NûTHEûlSCALûFRONT ûITûFORESEESûGRADUALû
CONSOLIDATIONûFROMûAûPRIMARYûDElCITûOFûû
of GDP last year before achieving a
primary balance in 2022 and 2023 and a
surplus of 0.8%-1.2% in the medium term.
That said, it noted that “estimates of the
Covid-19 impact on the economy are still
in preparation”.
While such estimates are uncertain over
the short term as they were made before
the novel coronavirus outbreak, they
should not be impacted over the long term
and affect debt sustainability analysis, the
government said.
Longer term the government said it
wants to reduce its foreign currency debt
so that by 2027 it will cover 40% of its
lNANCINGûNEEDSûINûNEWûPESOûDEBT ûWITHûTHEû
rest in foreign currency.
From 2027 onwards it hopes to achieve
an average interest rate of 5% in real termson foreign currency debt with maturities
OFûlVE ûûANDûûYEARS ûWITHûTHATûRATEû
dropping to 4.5% in 2035.COLOMBIA
AVIANCA SEEKS CREDITOR TALKS,
TEMPORARILY DEFERS DEBT PAYMENTSAVIANCA is looking to reach an agreement
with creditors as it temporarily defers
payments on long-term leases and certain
obligations due to the impact of the novel
coronavirus on commercial air travel, the
#OLOMBIANûAIRLINEûSAIDûINûAûLOCALûlLING
The move comes just months after the
borrower completed a major debt
restructuring that management hoped
would set it on a more sustainable footing.
“Avianca actively seeks a mutually
satisfactory agreement with its suppliers, key
strategic lenders and other creditors to address
THEûCURRENTûSCENARIO vûITûSAIDûINûTHEûlLING
In December, the airline announced that
ITûHADûREPROlLEDûALMOSTûALLûOFûITSûDEBTûANDû
lease obligations, luring some US$125m in
ADDITIONALûSECUREDûlNANCINGûFROMûHEDGEû
fund Citadel and a group of Latin American
private investors.
It also carried out an exchange of
US$484m of its May 2020 secured bonds
for secured bonds due 2023.
Like airline bonds across the globe,
those 9% 2023s have taken a massive hit
since, as commercial air travel has ground
to a halt in the wake of the coronavirus
pandemic.
The bonds have been trading at 24.325,
marking an up to 68 point drop since the
beginning of the month, according to
MarketAxess data.Along with other Latin American
airlines, Avianca was also hit with several
downgrades.
S&P lowered its rating to CCC from B–
with a negative watch, while Fitch cut its
senior unsecured rating on Avianca
Leasing to CC from CCC–.
The Colombian government closed
international airspace to passenger travel
last month, leaving Avianca stopping its
INTERNATIONALûmIGHTSûFORûûDAYSûANDû
impacting a portion of its business that
brought in 50% of its revenues last year,
according to S&P.
“Although the company has
immediately implemented additional cost
savings, we do not believe these measures
will be adequate to offset the impact of
already deteriorated liquidity and credit
metrics,” S&P said.
The ratings agency now expects the
company’s debt to Ebitda to stay well
above 5x.FITCH DOWNGRADES COLOMBIAFitch downgraded COLOMBIA’S sovereign
rating one notch on Wednesday to BBB–
with a negative outlook, citing weakening
lSCALûMETRICSûDUEûTOûTHEûNOVELûCORONAVIRUSû
and oil price volatility.
Fitch and S&P now both have
the country one notch above
junk territory, while Moody’s still rates
it Baa2.
The move is at least the third sovereign
downgrade for the region in the span of a
few weeks, as Latin America contends with
a looming economic slowdown.
ECUADOR was downgraded to CC by Fitch
last month, while MEXICO was cut by S&P
Global to BBB also last month.72 International Financing Review April 4 2020Apr 1 2020 Baidu US$600m Apr 7 2025 3.08 99.79 T+275 3.12Apr 1 2020 Baidu US$400m Apr 7 2030 3.43 99.54 T+285 3.48Apr 1 2020 Neijiang Investment Holding US$40m Apr 8 2023 3.8 100 - 3.8Apr 2 2020 Hyundai Capital America US$550m Apr 6 2023 5.75 99.89 T+550 5.79Apr 2 2020 Hyundai Capital America US$600m Apr 7 2025 5.88 99.92 T+550 5.89Apr 2 2020 Hyundai Capital America US$650m Apr 8 2030 6.38 99.94 T+575 6.38Apr 3 2020 KNOC SFr200m Apr 21 2025 0.88 100 MS+140 / Eidg+151 0.88Mar 31 2020 Israel US$2bn Jul 3 2030 2.75 100 T+206.8 2.75Mar 31 2020 Israel US$2bn Jul 3 2050 3.88 100 T+250.2 3.88Mar 31 2020 Israel US$1bn Jul 3 2120 4.5 100 T+312.7 4.5GLOBAL EMERGING MARKETS BOND DETAILS: WEEK ENDING 3/4/2020
Pricing date Issuer Amount Maturity Coupon (%) Reoffer Spread (bp) Yield (%)8 IFR Emerging 2327 p 67 - XX.indd 72 03 / 04 / 2020 19 : 21 : 02