The Colombia debt strategy that defined the Petro government’s final year is entering its closing chapter. Public credit director Javier Cuéllar confirmed that the Treasury will launch no further swap operations, will not sell dollars into the foreign exchange market, and will instead conduct a direct bond buyback using existing cash. The Rio Times, the Latin American financial news outlet, examines the final moves in a debt management campaign that has drawn both praise and scrutiny.
The announcements came in an interview published by La República, where Cuéllar laid out the government’s debt plans through the end of the presidential term on August 7. The Swiss franc total return swap, which we covered when its early unwind was announced, is now approaching completion with an objective of full cancellation before the May 31 first-round election.
A Buyback, Not a Swap, for Colombia Debt
Cuéllar drew a deliberate distinction between the buyback and the swaps that characterized the past year. In a swap, the government issues new bonds to replace old ones, moving maturities but not reducing the overall stock. The coming buyback will use Treasury cash to purchase existing TES directly and cancel them from the debt register, with no new issuance.
The rationale involves coupon obsolescence. Many outstanding bonds were issued when Colombia held investment-grade ratings and lower risk premiums, carrying coupons around 7%. With current market rates near 13% to 13.5%, those bonds trade at steep discounts, creating what Cuéllar described as a risk-return mismatch that contributed to the exodus of foreign investors in recent years.
The Numbers Behind Colombia Debt Levels
Cuéllar placed net public debt at approximately 1,090 trillion pesos ($208 billion), pushing back against estimates circulating above 1,200 trillion. The gap between gross and net figures — roughly 100 trillion pesos ($19 billion) — reflects the TRS collateral that will disappear from the balance sheet as the swap unwinds. Once the cancellation is complete, gross and net figures will converge significantly.
On the investor side, Cuéllar reported that foreign holdings of TES rose from 108 trillion to 174 trillion pesos during his tenure, a 61% increase. He attributed the inflows not solely to the December placement with a major institutional investor but to broader institutional interest in Colombian sovereign paper at current yields.
Maturity Concentration and the 2029 Question
Colombia’s fiscal watchdog has flagged a concentration of debt maturities in 2029, where obligations reach approximately 89 trillion pesos ($17 billion). Cuéllar acknowledged the concentration exceeds the government’s own prudential ceiling of 8% at roughly 8.9%, but described it as a deliberate choice that can be managed through early refinancing operations if market conditions improve.
Between July and December of last year, the government executed swaps totaling 182 trillion pesos that reduced outstanding principal by 23.5 trillion pesos. Cuéllar argued this track record demonstrates that maturity profiles can be adjusted with relatively few operations when timing is right.
The pledge to halt dollar monetization is equally significant. Analysts had attributed part of the peso’s recent strength to government dollar sales from bond proceeds. Cuéllar insisted the Treasury maintained a neutral FX position throughout, buying as many dollars through forward contracts as it sold in spot markets.
The next government, which takes office in August, will inherit a debt stock that is lower in gross terms than it appeared months ago but carries higher interest costs than any administration before it. Whether the operational improvements Cuéllar claims translate into structural fiscal health depends on revenue reform and spending discipline that fall outside the debt office’s mandate entirely.