OBG talks to Juan Pablo Córdoba Garcés, President, Colombian Stock Exchange (Bolsa de Valores de Colombia, BVC)

Interview: Juan Pablo Córdoba Garcés

What changes or new developments can we expect from the domestic stock market in 2014?

JUAN PABLO CÓRDOBA GARCES: The BVC is focused on making the market more accessible and attractive to international investors. The level of foreign investment in the market is growing and is between 25% and 28% of the total traded equity. Foreign participation in public debt has likewise been increasing. Around 10% of the stock of government bonds is now in hands of foreigners.

While the US market is recovering, other developed markets, particularly Europe, remain motionless. Emerging markets have also lost attractiveness, especially those in Latin America. This has had an impact on the region’s markets, which meant they started 2014 with a significant recession. Although Colombia suffered due to the poor performance of hydrocarbons, our market has recorded a 6% rise in value in 2014. Retail and cement companies have had a very good first half. In addition, the bond market has generated interest, and good dynamics and a busy agenda of bond issuances help us maintain a positive outlook. Rising interest rates have paved the way for an attractive second half of 2014.

How will the Integrated Latin American Market (Mercado Integrado Latinoamericano, MILA) increase internationalisation of the local market?

CÓRDOBA: We totally support the MILA initiative as part of our strategy to increase foreign participation in the local market. Mexico recently confirmed its integration in this platform, and before the end of 2014 Mexican equity will be available in the regional market. As we roll out the next steps of MILA, we plan to extend the offer from only equities to bonds and funds. We believe that funds will particularly boost trade in this platform, as they are the favourite instruments of citizens wishing to increase their savings. MILA still needs to tackle one significant challenge, which is the local treatment of investments. We are working on unifying the way regulations of member markets treat the investor, for which the arrival of Mexico is imperative.

How will the market assist in the development of infrastructure projects?

CÓRDOBA: There is a lot of expectation and interest with regards to issuing infrastructure bonds. Local and foreign investors are interested in participating in long-term bonds with high revenues. Initially, there are two possibilities with regards to infrastructure financing through the market: the first is that companies involved could directly seek financing. We have four infrastructure developers listed in the market, and these companies could issue bonds or equity. The other method, which is being developed by the Financiera de Desarrollo Nacional (National Financial Developer), is the issuance of bonds for financing projects. This product would be original in the Colombian market. We are studying the details of the structures and checking which additional guarantees would be required. These structures will not be offered in the market until 2015 or 2016. The companies winning the bids will be the ones deciding how and when the bonds will be issued.

What instruments will be offered in the short term?

CÓRDOBA: We are working on developing a money market, and a market on currency future stocks is about to be approved and launched. We expect it to be an interesting asset for the Colombian market, as it will allow companies to make swaps from variable interest rates to fixed interest rates, something that does not exist here at the moment. We also plan to launch the first stock options before the end of 2014.

How mature are the listed companies?

CÓRDOBA: Colombia is making a major effort to offer top companies in the market, and companies, for their part, are working to adopt international accounting standards. In addition, two years ago we started to survey the quality of the information given to investors by issuers. We called this the IR standard. Currently, we have 29 companies certificated with this recognition, and we are hoping to expand this number to 33 in 2014.