March 24, 2011 / 3:10 PM / 8 years ago

Colombia credit upgrade to spur infrastructure flows

* Infrastructure bottlenecks seen as major challenge

* Upgrade to diversity funding sources for Colombia

By Jack Kimball

BOGOTA, March 24 (Reuters) - Colombia’s sovereign credit upgrade will spur more infrastructure spending in energy and mining, ports and roads, but the country may have to wait two or three years for investment to kick in.

Latin America’s No. 4 oil producer’s strong growth record and ability to weather external shocks were cited by rating agency Standard and Poor’s as the reason to raise Colombia to investment grade last week while other major agencies are expected to follow this year.

“(Investment grade) will open doors for international investors to see investments in Colombia as more feasible ... it’s going to take a while, maybe two years,” said Maria Paula Moreno, Fitch Ratings director of infrastructure in Colombia.

“It’s just an added bonus because the money in local markets is here. You’re just going to diversify your funding sources with investment grade,” she said on the sidelines of an infrastructure conference in the Colombian capital, Bogota.

Standard and Poor’s credit rating decision earlier in March will help attract a new class of investors to Colombia, lowering borrowing costs, spurring investment and supporting economic growth in a country once written off as a failing state.

Colombia is enjoying a resurgence in investment, especially in its booming oil and mining sectors, as bombings, kidnappings and attacks dropped sharply since a 2002 U.S.-backed offensive against leftist guerrilla groups.

The two other major ratings agencies Moody’s and Fitch have Colombia rated just below investment grade. Moody’s said it would decide on Colombia’s rating before the summer.

Colombia has ambitious goals to boost coal and oil production over the next few years — the sectors’ performance has been cited by ratings agencies as a reason for the economy’s solid growth.

But Colombia’s deficient roads, rail and port capacity are cited by coffee, oil, coal and other industry players as a major impediment to better the nation’s exports and taking advantage of more markets like resource-hungry Asia.

Analysts say the investment upgrade, likely followed by more agencies’ decisions this year, will probably give the most impetus to the construction, but also electricity and mining and energy sectors.

“It’s going to take it’s time as people get accustomed ... in the medium term, three years, we’ll going to see the results,” said David Felipe Perez, vicepresident of structured finance at Bancolombia.

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below