COLOMBIA CONTINUES TO IMPRESS AND ATTRACT FOREIGN INVESTORS

Foreign direct investment in Colombia increased by 79.6% in the first half of 2011 compared to the same period last year totaling $7.3 billion, economic magazine Portfalio reported.

From January to June Colombia received $7.3 billion in foreign investment up from $4.1 billion for the same period last year. This puts Colombia on track of meeting its goal of $9.7 billion in 2011.

Most of the growth occured in Colombia's mining sector, which received $6.3 billion up 59.3% from the same period last year. Colombia's other sectors received less money but grew at a much greater rate, up 88% from last year.

The increase in investment coincides with an upgrade in Colombia's debt rating and is thought to be fueling the rise in the Nations currency. 

According to Colombia's finance minister, from January to April Colombia had record levels of investment, with $3.7 billion invested, 57% of which was invested in the mining and oil sector.

FITCH UPGRADES COLOMBIA RATING TO INVESTMENT GRADE

(Reuters) - Fitch Ratings on Wednesday raised its sovereign foreign currency credit rating for Colombia by one notch to BBB-minus, citing prudent economic policies and increased resiliency to internal and external shocks.

The investment-grade rating's outlook was revised down to stable from positive following the upgrade.

"Increased macroeconomic policy credibility, a flexible exchange rate regime, strengthened external liquidity position and moderate external debt have steadily improved the economy's capacity to absorb external shocks," Erich Arispe, sovereign credit analyst at Fitch said in a statement.

Both Standard & Poor's and Moody's Investors Service rateD Colombia investment grade earlier this year. Fitch's rating is now equal to S&P's BBB-minus and Moody's Baa3. 

COLOMBIAN ECONOMY WILL EXPAND BY 5.5% IN 2011

Colombia’s economy may expand as much as 5.5 percent in 2011, more than policy makers had been projecting, as strong expansion in credit and consumer confidence create “perfect” conditions for growth, central bank President Jose Dario Uribe said.

Latin America’s fourth-largest economy will be running close to full capacity in the second half of 2011, after expanding 4.3 percent in 2010, Uribe said in an interview in Washington yesterday.

“Consumer confidence is increasing again, credit growth is very dynamic,” said Uribe, 52, in an interview in Washington yesterday during the semi-annual meetings of the International Monetary Fund. “There are a lot of signals that the economy is strong, and is growing fast.”

The central bank’s 2011 economic growth projection is 4.5 percent, though this could be revised in the bank’s next quarterly inflation report to be published in roughly three weeks, Uribe said. Policy makers raised Colombia’s benchmark interest rate by a quarter point for a second straight month in March to 3.5 percent, noting the rise in consumer confidence, bank lending and retail sales.

As Colombia’s economic expansion gains momentum, inflation has been accelerating. Annual inflation was 3.19 percent in March, up from a five-decade low of 1.84 percent a year earlier. The central bank forecasts inflation near the 3 percent midpoint of its target range at the end of 2011 and 2012, Uribe said.

‘Stable, Sustained Path’

Economists cut their forecasts for year-end inflation to 3.31 percent in a central bank survey published last week, from 3.48 percent in the March survey.

“I see the Colombian economy in a perfect situation, on a very stable and very sustainable path,” said Uribe, who has a doctorate in economics from the University of Illinois at Urbana-Champaign, where he studied alongside Alexandre Tombini, the president of Brazil’s central bank.

The peso appreciated 1.1 percent last week to 1798.43 per dollar, its strongest level since October. The currency has gained 6.1 percent against the dollar this year, the best performer of seven Latin American currencies tracked by Bloomberg.

Recent gains in the peso are a result of companies bringing in funds from overseas to pay local taxes, Finance Minister Juan Carlos Echeverry said in an interview in Washington. Companies are slated to pay taxes between April 8 and April 25.

The currency’s strength has not prevented the “tradeables” sector of the economy from growing as fast as non-tradeables, Uribe said. Tradeables are goods that can be exported or substituted by imports, and so are sensitive to changes in the exchange rate.

Controls, Vigilance

Uribe said he sees no need for the sort of capital controls used in Brazil to stem gains by the peso. Such capital controls create distortions and should not be implemented without “clear evidence” that the benefits would outweigh the costs, Uribe said.

Colombia’s credit rating was raised one-level to BBB- by Standard & Poor’s last month, restoring the investment grade status lost in September 1999.

The yields on Colombia’s peso bonds fell to their lowest level in three months last week, as economists cut inflation forecasts and as bets mounted that funds from government securities maturing next month will be reinvested in debt.

The central bank needs to watch for signs that optimism about the Colombia’s economy could lead consumers and companies to take on too much debt, Uribe said.

“I’m not worried, but you have to always be alert that we don’t go mad and spend in excess,” Uribe said.

Gross credit expanded 19 percent to 183 trillion pesos ($102 billion) in the year through February, the fastest pace since October 2008, according to the financial regulator.

Asset price bubbles inflated by capital inflows could be dealt with by regulation of financial markets, Uribe said.

--Editors: Robert Jameson, Joshua Goodman

http://www.businessweek.com/news/2011-04-17/colombia-may-grow-faster-than-expected-5-5-in-2010-uribe-says.html

COLOMBIA OIL OUTLOOK IMPROVES WITH NEW FIND, HIGHER OUTPUT.

BOGOTA, April 26 (UPI) -- Colombia is seeing the outlook for its energy sector improve with progress on two fronts -- new oil finds and higher production from existing wells.

Ecopetrol President Javier Gutierrez said the company, the largest integrated hydrocarbons company in the country, would aim to be producing at least 1.45 million barrels per day of oil equivalent by 2013.

Rising oil prices have given fresh incentives to petroleum prospecting worldwide despite warnings that more expensive oil and oil gas could spell further trouble for global economic recovery.

Last year Colombia embarked on an aggressive campaign to attract more investment and industry expertise into its unexplored and under-exploited oil resources.

With economic growth set to continue through this year the government expects domestic oil demand to continue rising and also wants to reduce dependence on refining abroad.

Colombia depends on Mexican Gulf Coast refiners to buy and refine most of its heavy, sulfur-laden crude and it ranks 10th among the exporters of oil to the United States. It shipped an average of 365,000 barrels per day to the United States last year.

Ecopetrol said results of tests on a new oil well in the south of the country showed encouraging assessments.

The 7,371-foot deep Nunda-1 well in the Tello municipality of the department of Huila was first drilled on Jan. 27. Initial tests had a flow of 318 barrels of fluid a day, 71 percent of which was water, corresponding to an average of 92 barrels per day of crude oil, the company said in a news release.

The well was drilled as part of an exploration and exploitation agreement signed between Ecopetrol and the National Hydrocarbons Agency dating to 2006. Ecopetrol has 100 percent participation in the project.

Ecopetrol will begin evaluating the discovery to determine its commercial viability. Company officials quoted in Colombian news media said they were confident about the outcome of the tests.

Colombia already producing a little less than 1 million barrels a day so the goal of producing 1.45 million barrels a day in two years is not overoptimistic, industry analysts said.

Colombian oil production in March reached 884,000 barrels per day, up 15 percent from the same month in 2010.

Ecopetrol and its associates extracted 786,000 barrels per day, while the contracts administered by the National Hydrocarbon Agency ANH exceeded 98,000 barrels per day, Ecopetrol said in a news release. On average Colombia has produced 860,000 barrels of crude oil daily so far in the first quarter of 2011.

"The discovery opens up a new era for Ecopetrol by branching out to new types of exploration activities involving stratigraphic traps (those in which hydrocarbons accumulate due to variations in the deposit environment) in the Valle Superior del Magdalena and helps increase reserve inventories in this area of the country," the company said in a statement.

Ecopetrol, Colombia´s largest integrated oil and natural gas company responsible for 60 percent of total production, is one of the top 40 oil companies in the world and the fourth largest oil company in Latin America.

Ecopetrol is also involved in exploration and production activities in Brazil, Peru and the U.S. Gulf Coast, and owns the main refineries in Colombia. The company also owns most of the network of oil and multiple purpose pipelines in the country, petrochemical plants, and is entering into the biofuels business.

Read more: http://www.upi.com/Science_News/Resource-Wars/2011/04/26/Colombia-oil-outlook-improves-with-new-find-higher-output/UPI-81971303840263/#ixzz1KjTPtX4b

PETRI-DISH ECONOMIES: COLOMBIA INFLOWS, OUTPERFORMING

“I WAS here ten years ago when the economy was in crisis and every day’s news was worse than the day before. Now all the news is better than expected.” Juan Carlos Echeverry was a top official in Colombia’s finance ministry when the country, then violence-ridden, went through a messy mortgage bust and budget crunch in the late 1990s. Now, as finance minister, he is in charge of an economy on the rise.

Foreign investment is up, drawn by an improved security situation, the lure of minerals and a bouncy regional market. Public coffers are swelling, thanks to rising commodity prices and oil output. Standard & Poor’s hiked Colombia’s sovereign-debt rating to investment grade last month.

It is Mr Echeverry’s task to manage the consequences of this good news. High oil prices could encourage outsize demands for government spending. A flood of foreign capital could send the peso soaring and cause credit bubbles, while threatening the viability of industries from cut flowers to food processing. The decision to create an integrated regional bourse with Peru and Chile will attract more money.

Colombia is not the only emerging economy to face these issues. Countries from Brazil to South Korea have introduced a plethora of taxes and restrictions to deter foreign inflows. But Colombia is one to watch. Along with Chile, it pioneered the use of capital-inflow controls in the 1990s. Yet its strategy today is subtly different from many others, with more weight on fiscal reforms and less on controls.

The country’s technocrats do worry about the impact of inflows but they see the exchange rate as the most important shock absorber. And with Colombia’s long-term prospects improving, they believe a gradually stronger currency is inevitable. José Darío Uribe, governor of the central bank, puts a lot of weight on using prudential rules to stop inflows causing financial instability. The central bank does not allow banks to borrow in foreign currency and then lend in pesos, for instance. It guards against maturity mismatches in foreign currency and it has long limited banks’ foreign-exchange derivative bets.

Mr Uribe is less convinced that capital controls can do much to affect the exchange rate. Though no one rules them out, such controls are clearly not Colombia’s first line of defence. And when the central bank does intervene to try to stem excessive strength in the peso, the tactics are different from, say, Brazil’s.

On September 15th 2010 the central bank announced that it would buy $20m of foreign exchange every day for four months. That policy has been extended to mid-June. Mr Uribe is convinced that this kind of transparent, small, predictable intervention is much more effective than the large-scale but unpredictable accumulation of foreign-exchange reserves that other emerging markets have gone for. Colombia’s currency has depreciated slightly over the past six months, in contrast to most others in the region (see chart). How much this owes to the intervention strategy is debatable. Roberto Steiner of Fedesarrollo, a think-tank, says the goal is to insulate the central bank from pressure to intervene more fiercely.

The big question is whether Colombia’s government will be able to resist political pressures to spend. The budget deficit is likely to be well over 3% of GDP in 2011. Colombia urgently needs better infrastructure. Despite the government’s military gains against the FARC guerrillas, plenty of money still needs to be spent on security and reparations. As Alejandro Gaviria at the Universidad de los Andes says: “Colombia faces the demands of conflict and post-conflict spending at the same time.” And painfully high income inequality means pressure for social spending, too.

Mr Echeverry is trying hard to hold firm. A recent tax reform slashed tax breaks on investment. A Chilean-style fiscal rule, designed to limit the deficit and force the prudent use of commodity receipts, is working its way through Congress. But in a country whose constitutional court can force public spending (by, say, declaring that people have a right to expensive health care), that may not be enough. So the government is also pushing for a German-style constitutional amendment to enshrine the notion of fiscal sustainability. Mr Echeverry is confident. “The whole economic plan of our government is tailor-made to manage a boom,” he boasts.

http://www.economist.com/node/18560513

COLOMBIA RAISED TO INVESTMENT GRADE BY S&P ON GROWTH OUTLOOK

March 16 (Bloomberg) -- Colombia’s credit rating was boosted to investment grade by Standard & Poor’s, 11 years after it was cut to junk in the midst of an insurgency, as violence recedes and growth prospects improve.

S &P raised Colombia one step to BBB-, from BB+. The increase puts Colombia’s rating in line with that of Brazil and Peru. Moody’s Investors Service and Fitch Ratings rate Colombia one level below investment grade.

Colombia has cut its homicide rate by almost half since 2002, when former President Alvaro Uribe took office and boosted investor confidence by cutting debt levels, maintaining stable inflation and increasing economic growth. The government forecasts the economy grew 4 percent last year and estimates gross domestic product will rise 4.5 percent this year.

“This is a certificate of good behavior,” President Juan Manuel Santos said in a statement on the presidential website. The rating increase “allows many companies, funds and institutions with considerable resources to invest in Colombia,” he said.

Yields on Colombia’s 7.375 percent dollar bonds due in 2019 fell 14 basis points, or 0.14 percentage point, to 4.20 percent, the lowest since Jan. 13, according to data compiled by Bloomberg.

“A lot of people expected it for a very long time,” said Alberto Bernal, head of fixed-income research at Bulltick, a Miami-based brokerage that focuses on Latin America. “I expect Moody’s to move very fast after this. They’ve been very vocal on the possibility of an upgrade coming for Colombia.”

Budget Deficit

The government forecasts the budget deficit will equal 4.1 percent of GDP this year, up from 3.9 percent in 2010.

“Deepening domestic capital markets and improving external liquidity should continue to reduce the level of vulnerability embedded in the sovereign’s debt burden,” S&P said in a statement.

Colombia lost its investment grade rating with Moody’s and S&P in 1999, when violence and a banking crisis helped trigger six straight quarters of contraction beginning in 1998.

Santos, who took office in August, and Uribe, his predecessor, have drawn investment by improving security and weakening rebel groups, including the Revolutionary Armed Forces of Colombia, or FARC. Foreign direct investment more than quadrupled in the past decade, to $7.2 billion in 2009 from $1.5 billion in 1999.

“If Santos’s policies continue to be market friendly, and if they are able to hold onto gains that have been achieved in security, there will be further upgrades,” Bernal said.

Colombia’s rating outlook is stable, S&P said.

By Boris Korby and Helen Murphy

Convergys Announces Expansion into Colombia With State-of-the-Art Contact Center

CINCINNATI & BOGOTÁ, Colombia--(BUSINESS WIRE)--Convergys Corporation (NYSE: CVG), a global leader in relationship management, announces its expansion into Colombia with a state-of-the-art contact center that will provide top quality customer care services for leading corporations in the Americas. The new facility in Bogotá will bolster Convergys’ presence in Latin America, where the company already has offices and contact center facilities in Brazil, Mexico, and Costa Rica.

“Bogotá boasts a highly-educated bilingual population ideally suited to help ensure that Convergys continues to meet our global clients’ current and future need for superior technical and customer support, sales, and back office services.”

Known as the “Athens of South America” because of the number of top-notch colleges and universities located in the city, Bogotá impressed Convergys with its large bilingual talent pool and advanced telecommunications and transportation infrastructure. Choosing the location for its latest foray into Latin America, Convergys has outfitted a facility located in one of Bogotá's top commercial areas with the latest tools in contact center technology. Convergys is hiring for all levels of talent, including management, support staff and skilled contact center agents to begin serving clients from the site in the first quarter of 2011. Once fully staffed, the site will employ up to 2,000 customer service experts.

“Continued client demand for the high quality bilingual services Convergys provides from Latin America is driving our growth in the region,” said Jorge Robledo, Convergys Vice President of Operations in Latin America. “Bogotá boasts a highly-educated bilingual population ideally suited to help ensure that Convergys continues to meet our global clients’ current and future need for superior technical and customer support, sales, and back office services.”

Convergys Customer Solutions help optimize everyday interactions throughout our clients’ enterprises – turning the customer experience into a strategic differentiator. As a single-source provider of self-service, agent-assisted, and proactive care, Convergys combines analytics, innovative technology, and agent-assisted services to optimize the customer experience and strengthen customer relationships.

As defined by its core set of values, Convergys is committed to building from within by emphasizing talent development among its employees. Through a number of training and development programs provided, employees will be able to build a future with Convergys and move into bigger roles throughout the company.

Convergys is hiring in Bogotá. Interested applicants are encouraged to apply in person at Convergys' state-of-the-art contact center located at Empresarial 93, Calle 93 No. 11 A-11 in, Bogotá, or online at www.convergys.com/colombia.

About Convergys

Convergys Corporation (NYSE: CVG) is a global leader in relationship management. We provide solutions that drive more value from the relationships our clients have with their customers. Convergys turns these everyday interactions into a source of profit and strategic advantage for our clients.

For more than 30 years, our unique combination of domain expertise, operational excellence, and innovative technologies has delivered process improvement and actionable business insight to marquee clients all over the world.

Convergys has approximately 70,000 employees in 67 customer contact centers and other facilities in the United States, Canada, Latin America, Europe, the Middle East, and Asia, and our global headquarters in Cincinnati, Ohio. For more information, visit www.convergys.com