26 May, 2020 Colombia

Debt capital markets league table 2019: Colombia

Banking, Finance and Capital Markets

We present our findings on the Colombian debt capital markets space for 2019, revealing the firms involved in the most transactions and highest value deals, according to Latin Lawyer’s research.

According to Latin Lawyer data, law firm Gómez-Pinzón worked on the most debt capital markets transactions in Colombia during 2019, landing a place on four deals. It was followed by Philippi Prietocarrizosa Ferrero DU & Uría (Colombia)  and Dentons Cárdenas & Cárdenas, which were both involved in three transactions.

Our data, based on deals submitted by law firms to Latin Lawyer and closed during 2019, shows that eight debt transactions took place in that time period in South America’s third-biggest economy. The combined deal value was US$2.6 billion.

Brigard Urrutia and Mosquera Abogados had the highest deal value of any Colombian law firm, thanks to their work on the single largest transaction — Empresas Públicas de Medellín’s US$1.4 billion issuance. Clifford Chance LLP and Mosquera helped the issuer on the deal, while Milbank and Brigard Urrutia advised the underwriters. The value of the deal was more than three times larger than the second-biggest debt transaction in Colombia, according to our data.

Gómez-Pinzón also had a large combined deal value; its four deals were worth a total of US$1 billion.

Latin Lawyer recorded fewer debt capital markets deals in Colombia than in other Latin American economies of comparative or smaller size. Ricardo Fandiño, a partner at Gómez-Pinzón, gave his reasoning for the relative quiet of Colombia’s debt capital markets in 2019. “There have been less transactions than in the past. One of the main factors being the depreciation of the Colombian peso against the US dollar.”

But Fandiño stressed Colombia’s 2019 was a busy year for the wider marketplace, which was notable in the more conventional bank financing space. “It was a very strong year for Colombia’s economy across all industries and it showed by the use of financing mechanisms in different shapes and sizes. That included local and international issuances, but also a high number of bank and alternative domestic and cross-border financings.”

“In all, out of 42 financing transactions our firm worked on last year, approximately eight were capital markets transactions, so 20%,” he says.

PPU partner Hernando Padilla elaborates on the continued preference for more traditional methods of fundraising in Colombia. “Bank financing continues to be the preferred financing source for most Colombian companies, and 2019 showed large pools of liquidity and competitive pricing by local banks,” he says. While the capital markets continue to be an option for large companies, smaller businesses prefer to work with conventional bank loans, Padilla explains.

Carlos Fradique-Méndez, a partner at Brigard Urrutia, believes there may be wider use of debt capital markets in the near future in Colombia, suggesting it could become a greater source of funding for smaller companies. A commission, set to review the framework governing the Colombian capital markets, was launched by President Iván Duque in 2018, and could help change outdated regulations, particularly in its recommendation to segment debt capital markets.

The review, published in mid-2019, recommended a division of local capital markets into three segments: the public market, the private market, and the balcony market. “The proposed segmentation seeks to create differentiated standards for each of these markets and as a result stimulate small and medium companies to issue securities in the balcony market, which would be a market with less stringent disclosure and corporate government requirements,” Fradique-Méndez says.

But 2020 is set to be an uncertain year, with a slowdown in activity already noted amid the covid-19 pandemic. Ricardo Fandiño told Latin Lawyer that the effect of the pandemic had already led to the postponement of at least three international capital markets transactions that Gómez-Pinzón had been working on.

To see all Colombian debt capital markets deals that took place between July and December in 2019 and were submitted to Latin Lawyer, click here. To find information about deals that occurred during the first half of 2019, follow links here for January-February; March-April and May-June.  To read our methodology for Latin Lawyer’s transactional league tables, click here.

Latin Lawyer has published debt capital markets league table for Argentina and Chile. We will continue reporting on our Latin Lawyer 2019 debt capital markets data in upcoming briefings.

Latin Lawyer only recorded six local law firms on debt capital markets deals in Colombia, which is why the league tables are shorter compared to other Latin American countries.

Source: Latin Lawyer

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