Colombia’s government formally presented a $3.95 billion tax-reform bill to congress, even as unions and student groups sought to revive the street protests that helped scupper the reform’s original iteration, Reuters reported. The law would raise 15.2 trillion pesos per year, significantly less than the 23.4 trillion pesos sought by the government in an April proposal that was later withdrawn amid sometimes-deadly protests and lawmaker opposition.
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Colombia may start relying more heavily on shorter-term debt sales to cover its budget shortfalls, seeking to drive down interest costs after a failed tax-reform push triggered social unrest and sent yields higher. Yields on longer-term bonds fell, Bloomberg News reported. Public Credit Director Cesar Arias, a Finance Ministry official who is in charge of the government’s borrowing, said in an interview that he will begin to discuss with investors whether to scale back the maturities on some of the bonds it sells at auction.
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Colombia’s dollar bonds dropped and the peso led losses among emerging-market currencies after S&P Global Ratings cut the country’s credit rating to junk amid a political crisis and mass unrest, Bloomberg News reported. The nation’s dollar-denominated bonds due 2031 dropped 0.4% to 96.7 cents in early New York trading Thursday, sending their spread over U.S. Treasuries up to 1.84 percentage points. The peso weakened 2% to 3,760 per dollar.
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Avianca Holdings SA plans to raise $1.8 billion to repay debt and provide new financing as the Colombian airline eyes an exit from the bankruptcy reorganization it was forced into last year during the pandemic-driven travel collapse, Bloomberg News reported. The air carrier retained Seabury Securities LLC to help raise the exit financing, likely a combination of debt and equity, the company said in a regulatory filing Wednesday. Avianca said it will repay $1.4 billion in bankruptcy loans and have around $1 billion in liquidity when it emerges from the reorganization at some point this year.
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Net losses at airline Avianca Holdings increased 22% to $1.09 billion in 2020, due to the near-paralysis of global air travel because of COVID-19, Reuters reported. The airline, which is carrying out a restructuring process under the chapter 11 bankruptcy law, had losses of $894 million in 2019. Operations contracted 74% year-on-year, the airline said in a filing to Colombia’s financial regulator, while operating income was down to $1.71 billion, from $4.62 billion in 2019.
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Avianca Holdings SA plans to add dozens of routes using smaller aircraft as it plots its emergence from bankruptcy later this year, the airline’s chief executive said, Bloomberg News reported. Colombia’s largest carrier is expanding with 50 direct routes between secondary cities in coming years, said CEO Anko van der Werff in an interview. Using narrow-body planes, it will target tourist spots such as Punta Cana, Cartagena and Cancun, offering a new level of cheaper fares to capture demand for leisure travel that’s leading a rebound after the pandemic crippled the airline business.
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Latin America’s luck will change. Pandemic lockdowns caused more regional corporations to default between early May and June. But yield-starved investors will ignore some of these risks, Reuters reported. There’s a lot of bad news to ignore. The International Monetary Fund expects Latin American and Caribbean economies to contract by more than 8% in 2020, the most of any region, with only a 3.6% improvement in 2021. And non-financial companies with foreign debt have seen revenue dented by a combined $200 billion due to the pandemic, Fitch Ratings estimates.
Avianca Holdings said on Thursday it has won the support of a large number of institutional investors and existing lenders, meaning it will no longer need the Colombian government’s participation as part of its restructuring process, Reuters reported. Avianca, Latin America’s second-largest airline, filed for Chapter 11 bankruptcy in New York in May. A U.S. bankruptcy court approved a proposed financing plan of over $2 billion to help the carrier exit Chapter 11 restructuring in October. The airline was expecting $370 million in credit from the Colombian government.
During a pandemic that has wreaked havoc with global travel, Enrique Beltranena is something of a rarity: a happy airline boss. Volaris, his Mexican low-cost airline, has added, not cut, routes during the crisis, has a healthy balance sheet and is “cautiously optimistic” in its outlook, he said.
Colombia will bring home the $5.3 billion from its International Monetary Fund loan at a gradual pace to avoid causing turbulence in currency markets, deputy Finance Minister Juan Pablo Zarate said, Bloomberg News reported. This cautious approach also improves the chances of the nation getting a more favorable exchange rate, Zarate said in a video interview on Thursday. Colombia will be the first country to tap an IMF flexible credit line, a pre-approved source of funding that comes with no conditions on how it’s spent.