Colombia is one of few emerging market countries who have been levied prepayment penalties. In its aim to reduce debt servicing costs and lengthen the maturity of its debt, Colombia paid $7 million in prepayment penalties in the early 1990s. In April 1993 the Republic launched its first Eurobond issue, and has since maintained an active presence in the markets. That same year Colombia placed Samurai bonds in Japan and Yankees in the US totaling almost $1 billion. Soon after the Mexican crisis, in February 1995, Colombia was able to tap the capital markets once again, albeit with a small $10 million, 10 year bond at 150 bps over par. A year later, and in spite of its political crisis, it placed two bond issues for $200 million each, at spreads of 187 and 260 bps. The Republic was the first Latin sovereign to place a 20-year bond in the international markets. The initial success of Colombian debt and payment history was rewarded with an investment grade rating in 1995 (Standard&Poors BBB-, Moody's Baa3). It was thus attractive for investors looking for exposure in emerging markets but limited to investment grade debt.
1998 - a mixed year
Colombia decided to target European investors in 1998, to establish itself ahead of the euro.