Key Points
— Colombia’s Ministry of Finance bought more than US$290 million net in dollars on Tuesday and continued purchases Wednesday, according to BTG Pactual and BBVA estimates cited by Bloomberg, as the government readies a US$4 billion external bond buyback targeting dollar-denominated paper with coupons above 7%.
— The peso fell more than 1% on the dollar purchases, making it one of the worst-performing emerging market currencies Wednesday, with the TRM reaching $3,603.19 (still down 16.78% year-over-year). Colombia’s 2035 dollar bonds rose more than a cent to trade near 110 cents, the highest since November, as the prospect of supply reduction boosted existing paper.
— The debt operation lands in the middle of a public feud between President Gustavo Petro and BanRep over the central bank’s 100-basis-point rate hike to 11.25% on March 31. Petro has called the decision “stupidity,” “fascism,” and “economic genocide.” BanRep governor Leonardo Villar responded in Congress: “Genocide is being a murderer.”
Three stories in one: Javier Cuéllar’s debt team is doing what it does well—extending duration, cutting coupons, managing risk. Petro is attacking the central bank that he himself partially nominated. And Colombia’s May presidential election clock is ticking.
The Colombia bond buyback that Public Credit Director Javier Cuéllar announced this week marks the country’s most aggressive sovereign liability-management operation of 2026 and arrives in the middle of a constitutional showdown between the executive branch and the Banco de la República. The Rio Times, the Latin American financial news outlet, reports that the Ministry of Finance began accumulating dollars on Tuesday—more than US$290 million net in a single session, per BTG Pactual and BBVA—to fund a US$4 billion repurchase of dollar-denominated global bonds carrying coupons above 7%, with maturities spanning 2026 through 2054.
The Buyback Mechanics
Colombia has slightly more than US$43 billion in outstanding bonds denominated in dollars and euros, and last week’s TES local buyback of 5.4 trillion pesos (US$1.5 billion) was the domestic precursor to this week’s external operation. Cuéllar’s stated objective is straightforward: reduce interest costs by replacing high-coupon legacy paper. A similar operation in late 2025 swapped 8.4% average coupons for 5.7% new issuance, generating approximately US$600 million in savings.
Cuéllar is also racing to unwind a controversial US$9.3 billion total-return swap denominated in Swiss francs before Colombia’s May presidential election. Roughly half that position has already been canceled. The timing is deliberate: markets are pricing meaningful uncertainty around whether a Petro successor would maintain the same pace of liability management, and Cuéllar wants the complex positions settled before the political transition begins.
Why the Peso Is Falling
The peso’s 1%+ decline this week reversed it from a five-year peak reached earlier in April, and the move has a clear driver: when the government buys dollars to retire dollar debt, it adds temporary demand pressure to the local FX market. XP Investments Latin America strategist Andrés Pardo called the timing unsurprising: “This also combines with the objective of reducing short-term refinancing risk.” Colombian dollar bonds rose across the curve, with 2035s hitting 110 cents—their highest level since November—as the announced reduction in outstanding supply lifted remaining paper.
The fiscal backdrop that makes the buyback attractive also makes it necessary. Earlier in 2026, Colombia suspended its debt limits after projecting the widest fiscal deficit since the pandemic, with the 2026 primary deficit revised to 2% of GDP from 1.4%. Cuéllar is using the Iran-war oil windfall—Brent is projected to average above US$100 per barrel if the Strait of Hormuz remains closed another month, according to Goldman Sachs—to finance a meaningful fiscal cushion in 2026 and 2027 that he described as “new revenues not anticipated at the start of the year.”
The Petro-BanRep War
The debt operation’s favorable backdrop is being overshadowed by an escalating fight between the Petro government and the central bank. BanRep raised its benchmark rate by 100 basis points to 11.25% on March 31, with four directors voting for the increase, two for a 50bp cut, and one for holding. Inflation at 5.29% in February justified the majority decision, but Petro has called it “stupidity,” “fascism,” and “economic genocide,” and Finance Minister Germán Ávila walked out of the board meeting after losing the vote.
BanRep governor Leonardo Villar pushed back during a congressional hearing on April 15, the same day the bond buyback operation accelerated. “Genocide is being a murderer, and I cannot stay silent in the face of what the president says in a council of ministers—that board members act as genocidaires,” Villar told lawmakers, while defending the rate hike as a technical decision to preserve financial stability. Petro has also publicly criticized codirector Laura Moisá—whom he himself appointed in January 2025—as “fascist.”
What Markets Are Watching
The Colombian peso’s 17% year-over-year appreciation against the dollar gives the Ministry of Finance favorable entry points for its buyback operation, and the divergence between Petro’s confrontational rhetoric and Cuéllar’s technocratic execution is exactly the two-track Colombia that credit investors have learned to price. The May 31 presidential elections remain the defining near-term risk, since a Petro successor from the right could re-anchor fiscal expectations while a continuation of the current agenda under a new Pacto Histórico candidate would reinforce the structural deficit concerns that drove the IMF’s 2.3% Colombia growth forecast for 2026. In the meantime, Cuéllar is managing what he can manage—the coupon stack, the FX timing, the Swiss franc swap unwind—while Petro fights the battle he chose with BanRep, and the peso absorbs both.
Related Coverage: IMF WEO: Colombia 2.3% Growth 2026 • Chile’s Kast Unveils Megareform • IMF Clears Argentina Second Review