Colombia is holding investor meetings today (18 September) to discuss its strategy amid expectations of a larger-than-expected fiscal deficit, two portfolio managers said. Citigroup and JPMorgan are leading the meetings, they said.

President Abelardo de la Espriella, a conservative outsider, won Colombia’s presidential election on 21 June with 49.66% of the vote, and took office 7 August.

The country’s net debt is projected to reach 67.3% of GDP in 2027, while its fiscal deficit next year is expected at 9.4% of GDP – much wider than the expected fiscal deficit of 7.2% of GDP in 2026. The government aims to stabilize debt levels and eventually restore the fiscal rule as the country’s proposed 2027 budget includes more than COP 21tn (USD 6.65bn) in spending cuts.

The investor meetings are considered “non-deal” at this stage and are taking place in New York today, in addition to same-day Zoom calls scheduled with investors and analysts, the first portfolio manager said.

“What is of interest to investors is how they plan to achieve 1.1% of GDP savings in the budget and 2.2% of GDP savings for next year,” the second portfolio manager said. “Even if they deliver on these savings, the financing needs are enormous – we could be talking about up to USD 15bn in external funding needs for next year.  For a country [that still has] an investment-grade rating, that is unusual, to put it mildly.”

The sovereign is planning USD 4bn-USD 5bn in issuance in 2026, including USD 1bn of pre-financing for 2027, with similar issuance expectations next year, a sovereign credit analyst said.

“Maybe it runs up to USD 10bn if they go to the IMF,” this sovereign credit analyst said.

Colombia has a lot of debt coming due over the next two years, which is contributing to large financing needs facing the new government, the second portfolio manager said.

“Investors appreciate that the Ministry of Finance is communicating with investors, and clearly the debt management is much better in transparency and in presenting their strategy, but we need to see action,” this portfolio manager said.

The government could access the international bond market, but only at the right price, the second portfolio manager said. “That’s why it’s really essential they reduce the deficit,” this manager said.

Colombia’s USD 2bn 7.75% 2036 bond traded 17 September at 104.02, to yield 7.18%, according to MarketAxess. Its USD 732m 8.375% 2054 bond traded today at 105.921 to yield 7.85%.

While the key focus is around the new government’s strategy, taking action may take a little bit more time given the impact of the 10 August earthquake, the second sovereign credit analyst said.

“We want to hear about the medium-term plan – what are they planning to do over the next 2-3 years, and if that plan is credible and likely to be enforced,” the second sovereign analyst said. “Growth is still relatively robust; yes, debt has been increasing, but it went back down and is increasing back up. Measures taken by the previous Ministry of Finance did reduce some of the interest payment burden. It was good timing; they did all that and were able to absorb the shock of the August earthquake, but if they don’t restore the buffer and space for the next shock, they will not be as well prepared.”

In January, Colombia raised USD 4.95bn through three tranches of USD-denominated senior unsecured bonds.