SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 18-K/A

 

 

AMENDMENT NO. 2

For Foreign Governments and Political Subdivisions Thereof

 

 

ANNUAL REPORT

of the

REPUBLIC OF COLOMBIA

(Name of Registrant)

 

 

Date of end of last fiscal year: December 31, 2021

 

 

SECURITIES REGISTERED*

(As of the close of the fiscal year)

 

 

 

Title of Issues		Amount as to which registration is effective		Names of exchanges on which registered
N/A		N/A		N/A

 

Name and address of person authorized to receive notices

and communications from the Securities and Exchange Commission:

Consul General of the Republic of Colombia in the City of New York

Consulate of Colombia

10 East 46th Street

New York, New York 10017

Copies to:

Gregory Harrington, Esq.

Arnold & Porter Kaye Scholer LLP

601 Massachusetts Avenue, Northwest

Washington, D.C. 20001

 

 

 

*	The Registrant is filing this annual report on a voluntary basis.

 

 

 

This amendment to the annual report of the Republic of Colombia on Form 18-K for the year ended December 31, 2021 comprises:

 

(a)

Pages numbered 1 to 4 consecutively

 

(b)

The following exhibits:

 

This amendment to the annual report is filed subject to the Instructions for Form 18-K for Foreign Governments and Political Subdivisions thereof.

 

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SIGNATURE PAGE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant, the Republic of Colombia, has duly caused this annual report or amendment to annual report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Bogota D.C., Colombia, on the 2^nd day of February, 2023.

 

 

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EXHIBIT INDEX

 

EXHIBIT 1:		Conformed Copy of the Underwriting Agreement, dated January 24, 2023, among the Republic of Colombia, BBVA Securities Inc., Itau BBA USA Securities, Inc. and J.P. Morgan Securities LLC.
EXHIBIT 2:		Form of $2,200,000,000 7.500% Global Bonds due 2034.
EXHIBIT 3:		Opinion of the Head of Legal Affairs Group of the General Directorate of Public Credit and National Treasury of the Ministry of Finance and Public Credit with respect to the $2,200,000,000 7.500% Global Bonds due 2034, dated February 2, 2023.
EXHIBIT 4:		Opinion of Arnold & Porter Kaye Scholer LLP with respect to the $2,200,000,000 7.500% Global Bonds due 2034, dated February 2, 2023.
EXHIBIT 5:		Recent Developments in the Republic of Colombia, as of January 24, 2023.

 

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Exhibit 1

Republic of Colombia

 

 

Underwriting Agreement

January 24, 2023

BBVA Securities Inc.

Itau BBA USA Securities, Inc.

J.P. Morgan Securities LLC

As Representatives of the

Underwriters named

in Schedule II hereto.

Ladies and Gentlemen:

The Republic of Colombia (the “Republic”) proposes to issue and sell to the underwriters named in Schedule II hereto (the “Underwriters”), for whom you are acting as representatives (the “Representatives”), the principal amounts of its securities identified in Schedule I hereto, such amounts being subject to potential adjustment as provided in Schedule II hereto, consisting of 7.500% Global Bonds due 2034 to be issued under an indenture, dated as of January 28, 2015, as amended and supplemented by the First Supplemental Indenture, dated as of September 8, 2015 (as amended and supplemented, the “Indenture”), between the Republic and the trustee named therein (the “Trustee”), in the respective forms filed as exhibits to the Registration Statement (as hereinafter defined) (the “Securities”).

If the firm or firms listed in Schedule II hereto include only the firm or firms listed in Schedule I hereto, then the terms “Underwriters” and “Representatives” as used herein shall each be deemed to refer to such firm or firms.

1. Representations and Warranties. The Republic represents and warrants to, and agrees with, each Underwriter that:

(a) The Republic has filed with the Securities and Exchange Commission (the “Commission”) a registration statement No. 333-253587, which registration statement has become effective for registration under the Securities Act of 1933, as amended (the “Act”), of the Securities and other securities. The Securities are registered under such registration statement. Such registration

statement, as amended at the date of this Agreement, meets the requirements set forth in Commission Release No. 33-6424 (the “Release”) and Schedule B under the Act. Such registration statement, as amended as of the time each part thereof became effective, including the exhibits thereto and any documents incorporated by reference therein and any prospectus supplement deemed to be a part thereof that has not been superseded or modified, is hereinafter called the “Registration Statement.” “Registration Statement” without reference to a time means the Registration Statement as of the time of the first contract of sale for any Securities. The basic prospectus, dated April 15, 2021, filed as part of the Registration Statement, in the form in which it has been filed with the Commission prior to the date of this Agreement, is hereinafter called the “Basic Prospectus.” Any preliminary prospectus (including any preliminary prospectus supplement) relating to the Securities which has heretofore been filed or which is hereafter filed with the Commission pursuant to Rule 424(b) under the Act is hereinafter called a “Preliminary Prospectus.” The Republic has adequately disseminated the Basic Prospectus to the public a reasonable period before the offering of the Securities in accordance with the Release. The Basic Prospectus, as amended and supplemented immediately prior to the Applicable Time (as defined in Section 1(c) hereof), is hereinafter called the “Pricing Prospectus”; the forms of the final prospectuses relating to the Securities filed with the Commission pursuant to Rule 424(b) under the Act in accordance with Section 4(a) hereof is hereinafter called the “Prospectus”; any reference herein to the Basic Prospectus, the Pricing Prospectus, any Preliminary Prospectus or the Prospectus shall be deemed to refer to and include the documents incorporated by reference therein, as of the date of such prospectus; any reference to any amendment or supplement to the Basic Prospectus, any Preliminary Prospectus or the Prospectus shall be deemed to refer to and include any post-effective amendment to the Registration Statement, any prospectus supplement relating to the Securities filed with the Commission pursuant to Rule 424(b) under the Act and any annual reports on Form 18-K and any amendments to such Form 18-K on Form 18-K/A (including all exhibits thereto) (collectively, a “Form 18-K”) filed after the date of the Prospectus or the Basic Prospectus, as the case may be, under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and incorporated therein, in each case after the date of the Basic Prospectus, such Preliminary Prospectus or the Prospectus, as the case may be; and any reference to any amendment to the Registration Statement shall be deemed to refer to and include any Form 18-K of the Republic filed under the Exchange Act after the effective date of the Registration Statement that is incorporated by reference in the Registration Statement.

(b) The Registration Statement and each amendment thereto, as of the applicable effective date, conformed, and the Registration Statement as amended or supplemented as of the date hereof and the Closing Date (as defined below) does or will conform, in all material respects to the applicable requirements of the Act and the rules and regulations of the Commission thereunder and, as of the applicable effective date as to each part of the Registration Statement, did not, and

 

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as of the date hereof and the Closing Date does not or will not, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that the foregoing representations and warranties shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Republic by any Underwriter through the Representatives specifically for use in connection with the preparation of the Registration Statement. As of the date hereof and as of the Closing Date, the Prospectus and any amendment or supplement thereto conforms and will conform in all material respects to the applicable requirements of the Act and the rules and regulations of the Commission thereunder and does not and will not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the foregoing representations and warranties shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Republic by any Underwriter through the Representatives specifically for use in connection with the preparation of the Prospectus or any amendment or supplement thereto.

(c) For the purposes of this Agreement, the “Applicable Time” is 9:10 p.m. (New York City time) on the date of this Agreement; the Pricing Prospectus together with any Issuer Free Writing Prospectus (as defined herein) listed on Schedule III(a) hereto (collectively, the “Pricing Disclosure Package”), as of the Applicable Time, did not include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; and each Issuer Free Writing Prospectus listed on Schedule III(a) or (c) hereto does not conflict with the information contained in the Registration Statement, the Pricing Prospectus or the Prospectus and each Issuer Free Writing Prospectus listed on Schedule III(c) hereto, as supplemented by and taken together with the Pricing Disclosure Package as of the Applicable Time, did not include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that this representation and warranty shall not apply to statements or omissions made in an Issuer Free Writing Prospectus in reliance upon and in conformity with information furnished in writing to the Republic by any Underwriter through the Representatives expressly for use therein.

(d) The documents, if any, incorporated by reference in the Pricing Prospectus and the Prospectus, when they became effective or were filed with the Commission, as the case may be, complied in all material respects with the requirements of the Act or the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder, and none of such documents contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading; and

 

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any further documents so filed and incorporated by reference in the Pricing Prospectus and the Prospectus or any further amendment or supplement thereto when such documents become effective or are filed with the Commission, as the case may be, will comply in all material respects with the requirements of the Act or the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; and no such documents were filed with the Commission since the Commission’s close of business on the business day immediately prior to the date of this Agreement and prior to the execution of this Agreement, except as listed on Schedule III(b) hereto.

(e) No order preventing or suspending the use of any Preliminary Prospectus or any “issuer free writing prospectus” as defined in Rule 433 under the Act relating to the Securities (an “Issuer Free Writing Prospectus”) has been issued by the Commission, and each Preliminary Prospectus, at the time of filing thereof, conformed in all material respects to the requirements of the Act and the rules and regulations of the Commission thereunder, and did not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Republic by any Underwriter through the Representatives expressly for use therein.

(f) (i) At the time of filing the Registration Statement, (ii) at the time of filing the most recent post-effective amendment thereto, if any, (iii) at the earliest time that the Republic or another offering participant made a bona fide offer (within the meaning of Rule 164(h)(2) under the Securities Act) and (iv) as of the date hereof, the Republic was not and is not an “ineligible issuer” (as defined in Rule 405 under the Securities Act), without taking into account any determination by the Commission pursuant to Rule 405 that it is not necessary that the Republic be considered an “ineligible issuer.”

(g) The Republic has full power and authority to execute and deliver this Agreement and the Indenture (this Agreement and the Indenture are referred to herein collectively as the “Agreements”) and the Securities, to incur the obligations to be incurred by it as provided in the Agreements and the Securities, and to perform and observe the provisions of the Agreements and the Securities on its part to be performed or observed.

(h) This Agreement has been duly and validly authorized, executed and delivered by the Republic.

 

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(i) The Indenture has been duly and validly authorized, executed and delivered by the Republic and constitutes a legal, valid and binding obligation of the Republic enforceable in accordance with its terms.

(j) The Securities have been duly and validly authorized by the Republic and, when duly and validly executed, authenticated, issued, paid for and delivered in accordance with the Indenture, will constitute legal, valid and binding obligations of the Republic enforceable in accordance with their terms.

(k) The obligations of the Republic under the Securities will at all times on and following the Closing Date be supported by the full faith and credit of the Republic and will at all times on and following the Closing Date be general, direct, unconditional, unsecured and unsubordinated External Indebtedness (as defined in the Securities) of the Republic that will rank without any preference among themselves and equal in right of payment with all other present and future unsecured and unsubordinated External Indebtedness of the Republic.

(l) There is no constitutional provision, nor any provision of any treaty, convention, statute, law, regulation, decree, court order or similar authority binding upon the Republic, nor any provision of any contract, agreement or instrument to which the Republic or any Governmental Agency (as defined below) is a party, which would be contravened or breached in any material respect, or under which a material default would arise or a moratorium in respect of any obligations of the Republic or any Governmental Agency be effected, as a result of the execution and delivery of either of the Agreements, the issue of the Securities as contemplated herein and in the Prospectus and the Indenture, or as a result of the performance or observance by the Republic of any of the terms of the Agreements or the Securities. For purposes of this Agreement, “Governmental Agency” means any ministry, administrative department, agency, instrumentality, corporation, decentralized entity (entidad descentralizada) or other governmental entity of, or owned or controlled by, the Republic on the National Level (del orden nacional), but excluding (i) corporations in which the Republic or any group of Governmental Agencies owns less than 50% of the voting shares or directly controls the selection of less than 50% of the board of directors or comparable management group, and (ii) banks or financial institutions in which the Republic or any Governmental Agency is directly or indirectly a shareholder and which primarily fund themselves in the ordinary course from non-governmental sources and provide financing substantially to the private sector, and any other bank or financial institution owned or controlled directly or indirectly by any such bank or financial institution.

(m) No consent, approval (including exchange control approval), authorization, order, registration or qualification of or with any court or Governmental Agency or other regulatory body in the Republic is required for (i) the due execution, delivery and performance by the Republic of any of the Agreements or the Securities, (ii) the validity or enforceability against the Republic of any of the Agreements or the Securities, or (iii) the issue, sale or delivery of the Securities, except for the approvals, authorizations and other documents referred to in Section 7 of this Agreement (each of which shall be obtained on or prior to the Closing Date).

 

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(n) The Republic is empowered to issue the Securities. Any failure of the Republic to make the necessary or appropriate provisions in the National Annual Budget for the full and timely payment of any and all amounts due from the Republic under the Agreements and the Securities will not constitute a defense to enforcement of the obligations of the Republic under the Agreements or the Securities.

(o) There is no pending or, to the knowledge of the Republic after reasonable inquiry, threatened legal action or proceeding affecting the Republic or any Governmental Agency which (i) might individually or in the aggregate have a material adverse effect on the economic, fiscal or financial condition of the Republic or (ii) purports to affect the legality, validity or enforceability of any of the Agreements or the Securities.

(p) No event has occurred (and is continuing) which, had the Securities already been issued, would (with the giving of notice and/or the passage of time) constitute an Event of Default under the Securities (as defined therein).

(q) There is no income, stamp or other tax, levy, impost, deduction or other charge imposed or levied (whether by withholding or otherwise) by the Republic or any Governmental Agency or other Colombian governmental, revenue or taxing authority or agency on or by virtue of the execution or delivery by the Republic of any Agreement or the Securities, the enforcement hereof or thereof against the Republic, or any payment to be made by the Republic, pursuant hereto or thereto; provided, that the Securities are held by a non-resident and non-domiciliary of the Republic.

(r) Under the laws of the Republic, neither the Republic nor any of its property has any immunity from the jurisdiction of any court or from set-off or any legal process subject to the terms, conditions, limitations or exceptions under (i) Articles 192, 195, 298 and 299 of Law 1437 of 2011 (Código de Procedimiento Administrativo y de lo Contencioso Administrativo) as amended by Articles 80, 81 and 87 of Law 2080 of 2021; and (ii) Articles 593, 594 and 595 et al of Law 1564 of 2012 (Código General del Proceso); and Article 19 of Decree 111 of January 15, 1996, pursuant to which the revenues, assets and property of the Republic located in the Republic are not subject to execution, set-off or attachment. The waiver of immunity by the Republic contained in Section 16 hereof and in the Indenture and the Securities and the appointments of the Authorized Agent in Section 16 hereof and in the Indenture and the Securities, the consents by the Republic to the jurisdiction of the courts specified in Section 16 hereof and in the Indenture and the Securities, and the provisions that the law of the State of New York shall govern this Agreement, the Indenture and the Securities as provided in Section 15 hereof and in the Indenture and the Securities, are (or will be, when granted) irrevocably binding on the Republic.

 

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(s) The Republic is a member of and eligible to use the general resources of, the International Monetary Fund and is a member of the International Bank for Reconstruction and Development.

(t) Each of the Agreements is, or upon the due issue, execution and delivery thereof, will be, in proper legal form under the laws of the Republic for the enforcement thereof in the Republic against the Republic.

(u) The statistical and market-related data included in the Prospectus are based on or derived from sources that the Republic believes to be accurate.

2. Purchase and Sale

(a) Subject to the terms and conditions and in reliance upon the representations and warranties herein set forth, the Republic agrees to issue and sell to the Underwriters, and the Underwriters agree, severally and not jointly, to purchase from the Republic, at the purchase price and in the manner set forth in Schedule I hereto the principal amount of the Securities set forth opposite such Underwriter’s name in Schedule II hereto.

(b) Upon authorization by the Representatives of the release of the Securities, the several Underwriters propose to offer the Securities for sale upon the terms and conditions set forth in the Prospectus.

(c) Each Underwriter severally represents to and agrees with the Republic that it has not offered, sold or delivered and it will not offer, sell or deliver, directly or indirectly, any of the Securities or distribute or publish the Registration Statement, the Basic Prospectus or the Prospectus or any offering circular, form of application, advertisement or other document or information relating to the Securities, in any jurisdiction (including any Member State of the European Economic Area) except in accordance with foreign offering and sale requirements set forth in the Prospectus and otherwise under circumstances that will, to the best of its knowledge and belief, result in compliance with all applicable laws and regulations thereof (including, without limitation, any prospectus delivery requirements) and which will not impose any obligations on the Republic except as contained in this Agreement.

(d) Without prejudice to the provisions of Sections 1(b), 1(c), 1(d) and 1(m) above and except for registration under the Act and compliance with the rules and regulations thereunder and the qualification of the Securities for offer and sale under the laws of such jurisdictions as the Underwriters may request pursuant to Section 4(e), the Republic shall not have any responsibility for obtaining, and each Underwriter severally agrees with the Republic that each such Underwriter and its respective affiliates will obtain, any consent, approval or authorization required by them for the purchase, offer, sale or delivery by them of any of the Securities under the laws and regulations in force in any jurisdiction to which they are subject or in or from which they make such purchase, offer, sale or delivery of any of the Securities.

 

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3. Delivery and Payment. Delivery of and payment for the Securities shall be made at the office, on the date and at the time specified in Schedule I hereto, which date and time may be postponed by agreement between the Representatives and the Republic or as provided in Section 10 hereof (such date and time of delivery and payment for the Securities being herein called the “Closing Date”). Delivery of the Securities shall be made to the Representatives for the respective accounts of the several Underwriters against payment by the several Underwriters through the Representatives of the purchase price thereof, in accordance with the written order of the Republic or its duly authorized representative, by wire transfer (or in such other manner as may be specified in Schedule I hereto) and payable in the funds and in the currency specified in Schedule I hereto.

Certificates for the Securities shall be in fully registered form and in the authorized denominations specified in Schedule I hereto. Certificates for the Securities shall be registered in such names and in such authorized denominations as the Representatives may request upon at least three full business days’ prior notice to the Republic. The Republic agrees to have the Securities available for inspection by the Representatives at the New York offices of Arnold & Porter Kaye Scholer LLP, United States counsel to the Republic, not later than 1:00 p.m. on the business day prior to the Closing Date.

4. Agreements. The Republic agrees with the several Underwriters that:

(a) The Republic will prepare the Prospectus in the form approved by you and will file such Prospectus pursuant to the applicable provision of Rule 424(b) under the Act within the applicable time period prescribed for such filing by the rules and regulations of the Commission under the Act; and, prior to the completion of the offering of the Securities, the Republic will make no further amendment or any supplement to the Registration Statement, the Basic Prospectus or the Prospectus which shall be disapproved by you promptly after reasonable notice thereof. The Republic will promptly advise the Representatives after it receives notice thereof, of the time (i) when the Prospectus shall have been so filed or shall have been amended, or (ii) when any amendment to the Registration Statement shall have been filed or become effective, and will furnish you with copies of any such amendment or supplement. If requested by you prior to the Applicable Time, the Republic will prepare final term sheets, containing solely a description of the Securities, in the forms set forth in Schedule IV hereto, and will file such term sheets pursuant to Rule 433(d) under the Act within the time required by such Rule; and the Republic will file promptly all other material required to be filed by the Republic with the Commission pursuant to Rule 433(d) under the Act. For so long as the delivery of a prospectus (or in lieu thereof, the notice referred to in Rule 173(a) under the Act) is required in connection with the

 

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offering or sale of the Securities, and during such same period the Republic will advise you, promptly after it receives notice thereof, of the time when any amendment to the Registration Statement has been filed or becomes effective or any supplement to the Prospectus, or any amended Prospectus has been filed with the Commission, of any request by the Commission for any amendment to the Registration Statement or any amendment or any supplement to the Prospectus or for any additional information, of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the institution or threatening of any proceeding for that purpose and of the receipt by the Republic of any notification with respect to the suspension of the qualification of the Securities for offering or sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose. In the event of the issuance of any such stop order or of any such order preventing or suspending the use of any Preliminary Prospectus or other prospectus in respect of the Securities or suspending any such qualification, the Republic will use its best efforts to obtain the withdrawal of such order.

(b) For so long as the delivery of a prospectus (or in lieu thereof, the notice referred to in Rule 173(a) under the Act) is required in connection with the offering or sale of the Securities, the Republic will comply with all requirements imposed upon the Republic by the Act, as now and hereafter amended, and by the rules and regulations of the Commission thereunder, as from time to time in force, so far as necessary to permit the continuance of sales of or dealings in the Securities as contemplated by the provisions hereof and by the Prospectus. If, at any time during such period, any event occurs as a result of which the Prospectus as then amended or supplemented would include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made when such Prospectus (or in lieu thereof, the notice referred to in Rule 173(a) under the Act) is delivered, not misleading, or if it shall be necessary to amend or supplement the Prospectus to comply with the Act or rules thereunder, the Republic promptly will prepare and file with the Commission, in accordance with the first sentence of subsection (a) of this Section 4, an amendment or supplement (including, if appropriate, a Form 18-K or an amendment thereto) which will correct such statement or omission or an amendment which will effect such compliance.

(c) The Republic will make generally available to its security holders in the United States and to the Representatives, as soon as practicable, a statement in reasonable detail in the English language of the revenues and expenditures of the Republic covering the first full fiscal year of the Republic commencing after the date hereof, which will satisfy the provisions of Section 11(a) of the Act.

 

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(d) The Republic will furnish to counsel for the Underwriters, on behalf of the Representatives, without charge, copies of the Registration Statement (including one signed copy with all exhibits thereto) and each amendment thereto which shall become effective on or prior to the Closing Date; and, prior to 5:00 p.m., New York City time, on the New York Business Day next succeeding the date of this Agreement, furnish the Representatives with copies of the Prospectus in New York City in such quantities as the Representatives may reasonably request; and, so long as delivery of a prospectus (or, in lieu thereof, the notice referred to in Rule 173(a) under the Act) by an Underwriter or dealer may be required by the Act, as many copies of any Preliminary Prospectus and the Prospectus and any amendments thereof and supplements thereto (including any Form 18-K and any amendment thereto), as the Representatives may reasonably request; provided, that, in case any Underwriter or dealer is required to deliver a prospectus in connection with sales of any of the Securities at any time nine months or more after the date hereof, the Republic will prepare and deliver such copies to such Underwriter or dealer, but at such Underwriter’s or dealer’s expense.

(e) The Republic will furnish such information, execute such instruments and take such actions as may be required to qualify the Securities for offering and sale under the applicable securities or Blue Sky laws of such jurisdictions of the United States as the Representatives may designate and will maintain such qualifications in effect so long as required for the distribution of the Securities; provided, however, that the Republic shall not be required to file a consent to service of process in any such jurisdiction.

(f) So long as any of the Securities are outstanding, the Republic will furnish to the Representatives, upon request, copies of all reports and financial statements filed with the Commission or any national securities exchange in the United States.

(g) Until the Closing Date, the Republic will not, without the prior consent of the Representatives, offer, sell, contract to sell or otherwise dispose of any debt securities similar to the Securities issued or guaranteed by the Republic to be placed in the international or U.S. capital markets that are denominated in U.S. dollars and that mature more than one year after their respective dates of issue.

(h) The proceeds from the issue and sale of the Securities will be duly applied as set forth in the Prospectus and in a manner consistent with the relevant authorizations of the Comisión Interparlamentaria de Crédito Público and of the Consejo Nacional de Política Económica y Social (CONPES) and all applicable laws and regulations of the Republic.

(i) The Republic will use its best efforts to cause the Securities to be admitted and traded on the Luxembourg Stock Exchange as promptly as possible.

 

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5. Free Writing Prospectuses.

(a) (i) The Republic and each Underwriter agree that the Underwriters may prepare and use one or more preliminary or final term sheets relating to the Securities containing customary information;

(ii) The Republic represents and agrees that it has not made and will not make any offer relating to the Securities that would constitute an Issuer Free Writing Prospectus without the prior consent of the Representatives and that Schedules III(a) and III(c) hereto, taken together, contain a complete list of any Issuer Free Writing Prospectuses for which the Republic has received such consent; and

(iii) Each Underwriter represents and agrees that except for (A) any “free writing prospectus” (as defined by Rule 405 under the Act) containing customary information and prepared by the Underwriters for use by the Underwriters on Bloomberg screens or similar communications or (B) any “free writing prospectus” (as defined by Rule 405 under the Act) which is not (x) an Issuer Free Writing Prospectus or (y) a free writing prospectus containing “Issuer information” (as defined by Rule 433(h)(2) under the Act), it has not made and will not make any offer relating to the Securities that would constitute a free writing prospectus without the prior consent of the Republic, which consent shall not be unreasonably withheld;

(b) The Republic has complied and will comply with the requirements of Rule 433 under the Act applicable to any Issuer Free Writing Prospectus, including timely filing with the Commission or retention where required and legending; and

(c) The Republic agrees that if at any time following issuance of an Issuer Free Writing Prospectus any event occurred or occurs as a result of which such Issuer Free Writing Prospectus would conflict with the information in the Registration Statement, the Pricing Prospectus or the Prospectus or would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances then prevailing, not misleading, the Republic will give prompt notice thereof to the Representatives and, if requested by the Representatives, will prepare and furnish without charge to each Underwriter an Issuer Free Writing Prospectus or other document which will correct such conflict, statement or omission; provided, however, that this representation and warranty shall not apply to any statements or omissions in an Issuer Free Writing Prospectus made in reliance upon and in conformity with information furnished in writing to the Republic by any Underwriter through the Representatives expressly for use therein.

 

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6. Expenses. Whether or not the transactions contemplated hereunder are consummated or this Agreement is terminated and except as otherwise agreed to in writing, the Republic will pay all costs and expenses incident to the performance of the obligations of the Republic hereunder, including, without limiting the generality of the foregoing, (i) all costs and expenses of preparing, printing, filing and distributing the Registration Statement (including all exhibits thereto), the Basic Prospectus, any Preliminary Prospectus, any Issuer Free Writing Prospectus and the Prospectus, and (except as otherwise provided in Section 4(d) hereof) any amendments or supplements thereto, (ii) all costs and expenses of printing and distributing the Indenture, and the fees and expenses of the Trustee and any paying agents under the Indenture, (iii) all costs and expenses in connection with the engraving, printing, issuance and delivery to the Underwriters of the Securities, (iv) up to an agreed amount in respect of the determination of the eligibility of the Securities for investment and the qualification of the Securities in accordance with the provisions of Section 4(e) hereof, including filing fees and the reasonable fees and disbursements of counsel for the Underwriters in connection therewith and in connection with the preparation and printing of any Blue Sky Memorandum and Legal Investment Survey in respect of the Securities, (v) except as otherwise provided in Section 4(d) hereof, the costs of printing and delivery (including costs of mailing and shipping) to the Underwriters, in quantities as herein above stated, copies of the documents referred to in Section 4(d) hereof, (vi) any fees and expenses in connection with the listing of the Securities on such exchange, if any, as shall be specified in Schedule I hereto, (vii) the fees and disbursements of counsel for the Republic (for the avoidance of doubt, including local counsel) and (viii) any fees charged by securities rating services for rating the Securities, if and to the extent such ratings are requested by the Republic. Except as provided in Section 8 hereof, the Underwriters will pay all of their own costs and expenses, including the fees and disbursements of their United States counsel and Colombian counsel and their out-of-pocket expenses in connection with negotiations with the Republic.

7. Conditions to the Obligations of the Underwriters. The obligations of the Underwriters to purchase the Securities shall be subject to the accuracy of the representations and warranties on the part of the Republic contained herein, both (i) on, and as though made on, the date hereof and (ii) on, and as though made on, the Closing Date, to the accuracy of the statements of the Republic made in any certificates pursuant to the provisions hereof, to the performance by the Republic of its obligations hereunder performable prior to the Closing Date and to the following additional conditions:

(a) Prior to the Closing Date, no stop order suspending the effectiveness of the Registration Statement, as amended from time to time, or any part thereof or the use of the Prospectus or any Issuer Free Writing Prospectus shall have been issued and no proceedings for that purpose shall have been instituted or threatened; any request of the Commission for additional information shall have been complied with to the reasonable satisfaction of the Representatives; the Prospectus shall have been filed pursuant to the applicable provision of Rule 424(b) under the Act within the applicable time period prescribed for such filing by the rules and regulations under the Act and in accordance with Section 4(a) of this Agreement; and any final term sheet contemplated by Section 4(a) hereof, and any other material required to be filed by the Republic pursuant to Rule 433(d) under the Act, shall have been filed with the Commission within the applicable time periods prescribed for such filings by Rule 433.

 

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(b) The Head or Acting Head of the Legal Affairs Group of the Dirección General de Crédito Público y Tesoro Nacional of the Ministerio de Hacienda y Crédito Público of the Republic shall have furnished to the Representatives such counsel’s written opinion, dated the Closing Date, to the effect that:

(i) The Republic has full power and authority to execute and deliver the Agreements and the Securities, to incur the obligations to be incurred by it as provided herein and therein, and to perform and observe the provisions hereof and thereof on its part to be performed or observed;

(ii) The execution, delivery and performance by the Republic of the Agreements and the Securities have been duly authorized by all necessary action on its part and by all necessary constitutional, legislative, executive, administrative and other governmental action;

(iii) The Agreements have been duly authorized, executed and delivered by the Republic and the Agreements constitute legal, valid and binding obligations of the Republic enforceable in accordance with their terms;

(iv) The Securities have been duly authorized, executed, issued and delivered by the Republic in accordance with the Indenture, and, assuming due authentication and delivery by the Trustee, the Securities constitute legal, valid and binding obligations of the Republic enforceable in accordance with their terms entitled to the benefits provided by the Indenture;

(v) The obligations of the Republic under the Securities are or will at all times on and following the Closing Date be supported by the full faith and credit of the Republic and are or will at all times on and following the Closing Date be general, direct, unconditional, unsecured and unsubordinated External Indebtedness (as defined in the Securities) of the Republic that will rank without any preference among themselves and equal in right of payment with all other present and future unsecured and unsubordinated External Indebtedness of the Republic;

(vi) There is no constitutional provision, nor any provision of any treaty, convention, statute, law, regulation, decree, court order or similar authority binding upon the Republic, nor (to the best of such counsel’s knowledge) any provision of any contract, agreement or instrument to which the Republic or any Governmental Agency is a party, which would be contravened or breached in any material respect, or under which a material default would arise or a moratorium in respect of any obligations of the Republic or any Governmental Agency would be effected, as a result of the execution and delivery of any of the Agreements, the issue of the Securities as contemplated herein and in the Prospectus, or the performance or observance by the Republic of any of the terms of the Agreements or the Securities;

 

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(vii) No consent, approval (including exchange control approval), authorization, order, registration or qualification of or with any court or governmental agency or other regulatory body in the Republic is required for (A) the due execution, delivery and performance by the Republic of any of the Agreements or the Securities, (B) the validity or enforceability against the Republic of any of the Agreements or the Securities, or (C) the issue, sale or delivery of the Securities, except for, (I) the relevant portions of Law 80 of October 28, 1993, (II) the surviving portions of Law 185 of January 27, 1995 which were not repealed or amended by Law 533 of November 11, 1999 (III) Law 533 of November 11, 1999, (IV) Law 781 of December 20, 2002, (V) Law 1366 of December 21, 2009, (VI) Law 1624 of April 29, 2013, (VII) Law 1771 of December 30, 2015, (VIII) Law 2073 of December 31, 2020, (IX) Decree No. 1068 of May 26, 2015, (X) CONPES Document No. 4108 Departamento Nacional de Planeación, Ministerio de Hacienda y Crédito Público, dated November 22, 2022; (XI) evidence of publication of this Agreement in the Sistema Electrónico de Contratación Pública SECOP of the Republic, (XII) Authorization by Act of the Comisión Interparlamentaria de Crédito Público adopted in its meeting held on December 14, 2022 and (XIII) Resolution No. 0192 dated January 24, 2023 of the Ministerio de Hacienda y Crédito Público (each of which shall be listed in such counsel’s legal opinion and copies of which shall be furnished to counsel to the Underwriters on the Closing Date);

(viii) To ensure the legality, validity, enforceability, priority or admissibility in evidence of each of the Agreements and the Securities in the Republic, it is not necessary that any Agreement or the Securities be registered, recorded, published or filed with any court or other authority in the Republic or be notarized or that any documentary, stamp or similar tax be paid on or in respect of any such Agreements or the Securities, except for (A) the issuance by the Director General or Acting Director General of Public Credit and National Treasury of the Ministerio de Hacienda y Crédito Público of a request for publication of Resolution No. 0192 dated January 24, 2023 issued by Ministerio de Hacienda y Crédito Público in the Diario Oficial of the Republic, (B) filing of information before the Colombian Central Bank (Banco de la República) of public external indebtedness report on Form No. 6 (Formulario 6), resulting from the issuance of the Securities under the Indenture and (C) the publication of this Agreement in the Sistema Electrónico de Contratación Pública-SECOP of the Republic, to satisfy the requirement for such publications, each of which shall be effected on or prior to the Closing Date;

(ix) The Republic is empowered to issue the Securities. Any failure of the Republic to make the necessary or appropriate provisions in the National Annual Budget for the full and timely payment of any and all amounts due from the Republic under the Agreements and the Securities will not constitute a defense to enforcement of the obligations of the Republic under the Agreements or the Securities;

 

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(x) There is no pending or, to such counsel’s knowledge after reasonable inquiry, threatened legal action or proceeding affecting the Republic or any Governmental Agency which (A) might individually or in the aggregate have a material adverse effect on the economic, fiscal or financial condition of the Republic or (B) purports to affect the legality, validity or enforceability of any of the Agreements;

(xi) To such counsel’s knowledge after reasonable inquiry, no event has occurred (and is continuing) which, had the Securities already been issued, would (with the giving of notice and/or the passage of time) constitute an Event of Default under the Securities (as defined therein);

(xii) There is no income, stamp or other tax, levy, impost, deduction or other charge imposed or levied (whether by withholding or otherwise) by the Republic or any Governmental Agency or other Colombian governmental, revenue or taxing authority or agency on or by virtue of the execution or delivery by the Republic of any Agreement or the Securities, the enforcement hereof or thereof against the Republic, or any payment to be made by the Republic, pursuant hereto or thereto; provided, that the Securities are held by a non-resident and non-domiciliary of the Republic;

(xiii) Under the laws of the Republic, neither the Republic nor any of its property has any immunity from jurisdiction of any court or from set-off or any legal process, subject to the terms, conditions, limitations or exceptions under (i) Articles 192, 195, 298 and 299 of Law 1437 of 2011 (Código de Procedimiento Administrativo y de lo Contencioso Administrativo) as amended by Articles 80, 81 and 87 of Law 2080 of 2021; and (ii) Articles 593, 594 and 595 et al of Law 1564 of 2012 (Código General del Proceso); and Article 19 of Decree 111 of January 15, 1996, pursuant to which the revenues, assets and property of the Republic located in the Republic are not subject to execution, set-off or attachment. The waiver of immunity by the Republic contained in Section 16 hereof and in the Indenture and the Securities and the appointment of the Authorized Agent in Section 16 hereof, Section 9.7(b) of the Indenture and Section 16(b) of the Securities, the consents by the Republic to the jurisdiction of the courts specified in Section 16 hereof, Section 9.7(b) of the Indenture and Section 16(b) of the Securities, and the provisions that the law of the State of New York shall govern this Agreement and the Indenture and the Securities as provided in Section 15 hereof, Section 9.7(a) of the Indenture and Section 16(a) of the Securities, are irrevocably binding on the Republic and service of process effected in the manner set forth in Section 16 hereof, Section 9.7(b) of the Indenture and Section 16(b) of the Securities will be effective, insofar as Colombian law is concerned, to confer valid personal jurisdiction over the Republic;

 

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(xiv) The courts of the Republic would give effect to and enforce a judgment obtained in a court outside of the Republic through a procedural system provided for under Colombian law known as “exequatur,” subject to the provisions of (i) Article 605 (et al) of Law 1564 of 2012 (Código General del Proceso), which requires that there be reciprocity in the recognition of foreign judgments between the courts of the relevant jurisdiction and the courts of the Republic; and (ii) subject to compliance with the provisions of Articles 606 and 607 of Law 1564 of 2012 (Código General del Proceso). The pertinent provisions of such articles as they would affect a judgment obtained in a foreign court ordering payment of money by the Republic following a failure to pay amounts due and owing under the Agreements or the Securities are as follows: (A) the foreign judgment presented in the Republic for enforcement does not conflict with public order laws of the Republic other than those governing judicial procedures, (B) the foreign judgment, in accordance with the laws of the country in which it was obtained, is final and a duly legalized copy has been presented to the court in the Republic, (C) no proceedings are pending in the Republic with respect to the same cause of action, and no final judgment has been awarded in the Republic in any proceeding on the same subject matter and between the same parties and (D) in the proceedings commenced in the foreign court which issued the judgment, the defendant was served in accordance with the law of such jurisdiction and in a manner reasonably designed to give an opportunity to the defendant to defend the action. Proceedings for execution of a money judgment by attachment or execution against any assets or property located in the Republic would be within the exclusive jurisdiction of Colombian courts. A judgment obtained in a foreign court ordering payment of money by the Republic under the Agreements or the Securities would not conflict with public order laws of the Republic;

(xv) Each of the Agreements is in proper legal form under the laws of the Republic for the enforcement thereof in the Republic against the Republic;

(xvi) The Registration Statement, as amended, and the Prospectus, as amended or supplemented, and their filing with the Commission have been duly authorized by and on behalf of the Republic, and the Registration Statement, as amended, has been duly executed by and on behalf of the Republic, and the information in the Registration Statement, as amended, and the Prospectus, as amended or supplemented, stated on the authority of public officials of the Republic has been stated in their official capacities thereunto duly authorized;

(xvii) The statements in the Registration Statement, as amended, and the Prospectus, as amended or supplemented, relating to the Securities and the Indenture, insofar as matters of Colombian law are concerned, and all other statements in the Registration Statement and the Prospectus with respect to or involving Colombian law are correct in all material respects;

 

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(xviii) The Refrendación (Acknowledgment) of the Agreements and the Securities by the Contralor General de la República, pursuant to Law 42 of 1993, is not required under Colombian law for the due execution, delivery, performance, validity or enforceability of the Agreements or the Securities. The Contralor General de la República is required by law to acknowledge the Agreements and the Securities; provided, that, the Securities have been issued according to Colombian regulations and in compliance with all applicable requirements. The Securities have been so issued and the Agreements have been duly authorized and all necessary actions have been taken to comply with all applicable requirements. Pursuant to Colombian law and regulations, the failure by the Contralor General de la República to acknowledge the Agreements and the Securities will not affect the obligations of the Republic in respect of the Securities; and

(xix) In addition, such counsel shall have furnished the Underwriters with a letter, dated the Closing Date, to the effect that:

(A) No information has come to such counsel’s attention that causes such counsel to believe that the Registration Statement, at the respective times each part became effective, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading;

(B) No information has come to such counsel’s attention that causes such counsel to believe that the Prospectus, as of the date thereof or on the Closing Date, contained or contains an untrue statement of a material fact or omitted or omits to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; and

(C) No information has come to such counsel’s attention that causes such counsel to believe that the documents specified in a schedule to such counsel’s letter, consisting of those included in the Pricing Disclosure Package, as of the Applicable Time, contained any untrue statement of a material fact or omitted to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

Such counsel may state that he or she is not passing upon and does not assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Prospectus (except to the extent expressly set forth in (xvii) above) and that such counsel makes no representation that such counsel has independently verified the accuracy, completeness and fairness of such statements (except as aforesaid), and that such counsel’s opinions referred to in this subsection (b) are limited to matters of Colombian law and, insofar as the opinion required by this subsection (b) is affected by matters of United States or New York law, it may be

 

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given in reliance upon the opinion required by subsection (c) of this Section 7 and that, insofar as the foregoing opinions relate to the legality, validity, binding effect or enforceability of any agreement or obligation of the Republic, such counsel has assumed that each party to such agreement or obligation other than the Republic has satisfied those legal requirements that are applicable to it to the extent necessary to make such agreement or obligation enforceable against it.

(c) Arnold & Porter Kaye Scholer LLP, United States counsel to the Republic, shall have furnished to the Representatives their written opinion, dated the Closing Date, to the effect that:

(i) Assuming that the Securities have been duly authorized, executed, authenticated, issued and delivered against payment therefor, the Securities constitute valid, binding and enforceable obligations of the Republic, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally, to general principles of equity (whether enforcement is considered in a proceeding in equity or at law) and to possible judicial action giving effect to governmental actions or foreign laws affecting creditors’ rights; and the Securities are entitled to the benefits of the Indenture;

(ii) Assuming that the Indenture has been duly authorized, executed and delivered by the parties thereto, the Indenture constitutes a valid, binding and enforceable agreement of the Republic, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally, to general principles of equity (whether enforcement is considered in a proceeding in equity or at law) and to possible judicial action giving effect to governmental actions or foreign laws affecting creditors’ rights;

(iii) The issuance and sale of the Securities by the Republic pursuant to this Agreement and the performance by the Republic of its obligations in this Agreement, the Indenture and the Securities do not require any consent, approval, authorization, registration or qualification of or with any United States federal or New York State governmental authority that in such counsel’s experience is normally applicable with respect to such issuance, sale or performance, except such as have been obtained under the Act; provided, that, such counsel need express no opinion as to such consents, approvals, authorizations, registrations or qualifications that may be required under state securities or Blue Sky laws;

(iv) Under the laws of the State of New York relating to personal jurisdiction, assuming the Republic has duly authorized, executed and delivered this Agreement, the Indenture, and the Securities and authenticated the Securities in accordance with the Indenture, (1) the Republic has (A) pursuant to Section 16 of this Agreement, Section 9.7(b) of the Indenture and Section 16(b) of the Securities, to the fullest extent permitted by law, validly and irrevocably submitted to the jurisdiction of any New York State or United

 

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States federal court located in the Borough of Manhattan, The City of New York, in any action, suit or proceeding brought by any Underwriter or any person who controls an Underwriter, or any other person arising out of or relating to this Agreement, the Indenture or the Securities, respectively, (B) pursuant to Section 16 of this Agreement, Section 9.7(b) of the Indenture and Section 16(b) of the Securities, to the fullest extent permitted by law, validly and irrevocably waived any objection to the laying of venue of any such action, suit or proceeding in any such court, (C) pursuant to Section 16 of this Agreement, validly and irrevocably waived and agreed not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum, (D) validly and irrevocably appointed the Consul General of the Republic in The City of New York as its authorized agent for the purpose described in Section 16 hereof, Section 9.7(b) of the Indenture and Section 16(b) of the Securities, and service of process effected on such agent in the manner set forth in Section 16 hereof, Section 9.7(b) of the Indenture and Section 16(b) of the Securities will be effective to confer valid personal jurisdiction over the Republic in any such action, and (2) the waiver by the Republic, pursuant to Section 16 hereof, Section 9.7(b) of the Indenture and Section 16(b) of the Securities, of any immunity to jurisdiction to which it may otherwise be entitled (including sovereign immunity and immunity from pre-judgment attachment and post-judgment attachment) in any such action in any such court is legal, valid and binding under New York State and United States federal law;

(v) The statements set forth in the Prospectus under the heading “Taxation — United States Federal Taxation,” insofar as such statements purport to describe the principal United States federal income tax consequences of a purchase of the Securities, constitute fair summaries of such consequences;

(vi) The Registration Statement is effective under the Act and, to the best of such counsel’s knowledge, no stop order with respect thereto has been issued, or proceeding for that purpose instituted or threatened by the Commission;

(vii) The statements in the Basic Prospectus under the heading “Description of the Securities,” and the statements in the Prospectus under the heading “Description of the Bonds,” insofar as such statements purport to summarize certain provisions of the Securities and the Indenture, provide a fair summary of such provisions; and

(viii) In addition, such counsel shall have furnished the Underwriters with a letter, dated the Closing Date, to the effect that:

 

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(A) The Registration Statement (except for the financial and statistical data, including any mining or petroleum reserve or production data, included therein, as to which such counsel need express no view), at the respective times each part thereof became effective, and the Prospectus (except as aforesaid), as of the date thereof, appeared on their face to be appropriately responsive in all material respects to the requirements of the Act and the rules and regulations thereunder;

(B) No information has come to such counsel’s attention that causes such counsel to believe that the Registration Statement (except for the financial and statistical data, including any mining or petroleum reserve or production data, included therein, as to which such counsel need express no view), at the respective times each part thereof became effective, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading;

(C) No information has come to such counsel’s attention that causes such counsel to believe that the Prospectus (except as aforesaid), as of the date thereof or on the Closing Date, contained or contains an untrue statement of a material fact or omitted or omits to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; and

(D) No information has come to such counsel’s attention that causes such counsel to believe that the documents specified in a schedule to such counsel’s letter, consisting of those included in the Pricing Disclosure Package, as of the Applicable Time, contained any untrue statement of a material fact or omitted to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

Such counsel may state that they are not passing upon and do not assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Registration Statement or the Prospectus (except to the extent expressly set forth in (v) and (vi) above) and that such counsel makes no representation that such counsel has independently verified the accuracy, completeness and fairness of such statements (except as aforesaid), and that their opinions referred to in this subsection (c) are limited to the federal laws of the United States and the laws of the State of New York, and such counsel may, as to all matters governed by the laws of the Republic, assume the correctness of, and their opinion may be subject to the qualifications, assumptions and exceptions set forth in, the opinion of the Head or Acting Head of the Legal Affairs Group of the Dirección General de Crédito Público y Tesoro Nacional of the Ministerio de Hacienda y Crédito Público of the Republic referred to above.

 

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(d) The Representatives shall have received the favorable opinion or opinions of Sullivan & Cromwell LLP, United States counsel for the Underwriters, with respect to the validity of the Securities, the Registration Statement, the Prospectus, this Agreement, the Indenture and other related matters as the Representatives may reasonably require. In rendering such opinion or opinions, such counsel may rely as to all matters of the laws of the Republic upon the opinion of Brigard & Urrutia Abogados S.A.S. referred to below and on the opinion of the Head or Acting Head of the Legal Affairs Group of the Dirección General de Crédito Público y Tesoro Nacional of the Ministerio de Hacienda y Crédito Público of the Republic referred to in paragraph (b).

(e) The Representatives shall have received the favorable opinion or opinions of Brigard & Urrutia Abogados S.A.S., special Colombian counsel to the Underwriters, with respect to the validity of the Securities, the Registration Statement, the Prospectus, this Agreement, the Indenture and other related matters as the Representatives may reasonably require. In rendering such opinion or opinions, such counsel may rely as to all matters of United States law upon the opinion of Sullivan & Cromwell LLP referred to above.

(f) On and after the Applicable Time and on or prior to the Closing Date, (i) there shall not have occurred any material adverse change, or any development involving a prospective material adverse change, in or affecting the Republic which, in the judgment of the Representatives, materially impairs the investment quality of the Securities; (ii) no proceeding shall be pending or threatened to restrain or enjoin the issuance, sale or delivery of the Securities or in any manner to question the laws, proceedings, directives, resolutions, approvals, consents or orders under which the Securities are to be issued or to question the validity of the Securities, and none of said laws, proceedings, directives, resolutions, approvals, consents or orders shall have been repealed, revoked or rescinded in whole or in relevant part; (iii) the Securities will be rated at least the ratings indicated in Schedule I by the rating agencies, if any, listed in Schedule I and there shall not have been any public announcement by any “nationally recognized statistical rating organization” (as defined pursuant to Section 3(a)(62) of the Exchange Act) that any such organization has under surveillance or review its rating of any debt securities of the Republic (other than the announcement with positive implications of a possible upgrading, and no implication of a possible downgrading, of such rating); (iv) there shall not have occurred any outbreak or escalation of major hostilities in which the United States or the Republic is involved, any declaration of war by the United States or the Republic or any other substantial national or international calamity or emergency if, in the judgment of the Representatives, the effect of any such outbreak, escalation, declaration, calamity or emergency makes it impractical or inadvisable to proceed with the completion of the sale of and payment for the Securities; and (v) the Republic shall not have ceased to be a member of the International Monetary Fund and of the International Bank for Reconstruction and Development.

 

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(g) The Representatives shall have received a certificate from the Director General or the Acting Director General of the Dirección General de Crédito Público y Tesoro Nacional of the Ministerio de Hacienda y Crédito Público of the Republic, dated the Closing Date, in which such official shall state that, to the best of his knowledge after reasonable investigation, (i) the representations and warranties of the Republic contained in Section 1 hereof are true and correct on and as of the date of this Agreement and of such certificate; (ii) since the date as of which information is given in the Pricing Prospectus, there has been no material adverse change, nor any development involving a prospective material adverse change, in or affecting the condition, financial, economic, political or other, of the Republic, except as set forth or contemplated by the Pricing Prospectus; and (iii) none of the events described in Sections 7(a) and 7(f)(ii) and (v) hereof has occurred.

(h) On or prior to the Closing Date, the Consul General of the Republic in The City of New York shall have accepted his appointment as authorized agent of the Republic upon which process may be served in any action by (i) the holder of any Security arising out of or based upon the Securities which may be instituted in any state or federal court in the Borough of Manhattan, The City of New York or (ii) any Underwriter or any person controlling any Underwriter, and arising out of or based upon this Agreement, the Securities and the Indenture which may be instituted in any state or federal court in the Borough of Manhattan, The City of New York.

(i) On or prior to the Closing Date, counsel for the Underwriters shall have been furnished with such documents and information as they may reasonably require for the purpose of enabling them to pass upon the matters described in subsections (d) and (e) above, and the Representatives shall have received such documents, opinions and information as the Representatives may reasonably require in order to evidence the accuracy and completeness of any of the representations and warranties, or the fulfillment of any of the conditions, herein contained; and all proceedings taken by the Republic in connection with the issuance and sale of the Securities as herein contemplated shall be reasonably satisfactory in form and substance to the Representatives.

(j) The Republic shall have complied with the provisions of Section 4(d) hereof with respect to the furnishing of copies of the Prospectus on the New York Business Day next succeeding the date of this Agreement.

If any of the conditions specified in this Section 7 shall not have been fulfilled in all material respects when and as provided in this Agreement, or if any of the opinions, certificates, documents and information mentioned above or elsewhere in this Agreement shall not be in all material respects reasonably satisfactory in form and substance to the Representatives and their counsel, this Agreement and all obligations of the Underwriters hereunder may be canceled at, or at any time prior to, the Closing Date by the Representatives by notice to the Republic in writing or by telephone, confirmed in writing, or by telex, facsimile, cable or telegraph.

 

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8. Reimbursement of Underwriters’ Expenses. If the sale of the Securities provided for herein is not consummated because any condition to the obligations of the Underwriters set forth in Section 7 hereof is not satisfied (other than clause (iv) of Section 7(f)) or because of any refusal, inability or failure on the part of the Republic to perform any agreement herein or comply with any provision hereof other than by reason of a default by either of the Underwriters, the Republic will reimburse the Underwriters severally upon demand for all out-of-pocket expenses (including reasonable fees and disbursements of counsel) that shall have been documented and reasonably incurred by them in making preparations for the purchase, sale and delivery of the Securities. If this Agreement is terminated by you on the grounds specified in Section 10 or 11 hereof, the Republic will not be obligated to reimburse the Underwriters for their out-of-pocket expenses.

9. Indemnification and Contribution.

(a) The Republic agrees to indemnify and hold harmless each Underwriter, and each person who controls any Underwriter within the meaning of the Act against any and all losses, claims, damages or liabilities, joint or several, to which they or any of them may become subject under the laws of any jurisdiction, including but not limited to the Act, the Exchange Act or other federal or State statutory law or regulation, at common law or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement as originally filed or in any amendment thereof, or in any Preliminary Prospectus, the Pricing Prospectus or the Prospectus, or any amendment thereof or supplement thereto, any Issuer Free Writing Prospectus, or any “issuer information” filed or required to be filed pursuant to Rule 433(d) under the Act, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and agrees to reimburse each such indemnified party for any legal or other expenses reasonably incurred by him or it in connection with investigating or defending any such loss, claim, damage, liability or action within a reasonable time after such expenses are incurred; provided, however, that the Republic will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon any untrue statement or alleged untrue statement or omission or alleged omission made therein in reliance upon and in conformity with written information furnished to the Republic by or on behalf of any Underwriter through the Representatives specifically for use in connection with the preparation thereof. This indemnity agreement will be in addition to any liability which the Republic may otherwise have.

(b) Each Underwriter agrees severally and not jointly to indemnify and hold harmless the Republic and each of its officials, including its authorized representative in the United States, who signs the Registration Statement, against any and all losses, liabilities, claims, damages and expenses as incurred, but only with reference to written information relating to such Underwriter furnished to the Republic by or on behalf of such Underwriter through the Representatives specifically for use in the preparation of the documents referred to in the foregoing indemnity. This indemnity agreement will be in addition to any liability which any Underwriter may otherwise have.

 

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(c) Promptly after receipt by an indemnified party under this Section 9 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 9, notify the indemnifying party in writing of the commencement thereof; but the omission so to notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party otherwise than under Section 9 (a) or (b), as the case may be. In case any such action is brought against any indemnified party, and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein and, to the extent that it may elect by written notice delivered to the indemnified party promptly after receiving the aforesaid notice from such indemnified party, to assume the defense thereof, with counsel satisfactory to such indemnified party; provided, however, that if the defendants (including any impleaded parties) in any such action include both the indemnified party and the indemnifying party, and the indemnified party shall have reasonably concluded that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party, the indemnified party or parties shall have the right to select separate counsel to assume such legal defenses and to otherwise participate in the defense of such action on behalf of such indemnified party or parties. Upon receipt of notice from the indemnifying party to such indemnified party of its election so to assume the defense of such action and approval by the indemnified party of counsel, the indemnifying party will not be liable to such indemnified party under this Section 9 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof unless (i) the indemnified party shall have employed separate counsel in connection with the assertion of legal defenses in accordance with the proviso to the next preceding sentence (it being understood, however, that the indemnifying party shall not be liable for the expenses of more than one separate counsel in each jurisdiction, approved by the Representatives in the case of subsection (a) of this Section 9, representing the indemnified parties under such subsection who are parties to such action), (ii) the indemnifying party shall not have employed counsel satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of commencement of the action or (iii) the indemnifying party has authorized the employment of counsel for the indemnified party at the expense of the indemnifying party; and except that, if clause (i) or (iii) is applicable, such liability shall be only in respect of the counsel referred to in such clauses (i) and (iii). The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent not unreasonably withheld.

 

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(d) In order to provide for just and equitable contribution in circumstances in which the indemnification provided for in subsections (a) or (b) of this Section 9 is due in accordance with its terms but is for any reason held by a court to be unavailable, on grounds of policy or other similar grounds, the Republic and the Underwriters shall contribute to the aggregate losses, claims, damages and liabilities (including any legal or other expenses reasonably incurred in connection with investigating or defending same) to which the Republic and one or more of the Underwriters may be subject in such proportion so that the Underwriters are responsible for that portion represented by the percentage that the total of the underwriting discounts appearing on the front cover page of the Prospectus Supplement bears to the total public offering price of the Securities appearing thereon and the Republic is responsible for the balance. If, however, the allocation provided by the immediately preceding sentence is not permitted by applicable law or if the indemnified party failed to give the notice required in Section 9(c), then each indemnifying party will contribute to such amount paid or payable by such indemnified party in such proportion as is appropriate to reflect not only the relative benefits but also the relative fault of the Republic, on the one hand, and the Underwriters, on the other hand, in connection with the statements or omissions which resulted in such loss, claims, damages or liabilities (or actions in respect thereof), as well as other relevant equitable considerations. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Republic or the Underwriters and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. Notwithstanding the foregoing, (y) in no case shall any Underwriter (except as may be provided in an agreement among Underwriters) be responsible for any amount in excess of the total of the underwriting discounts applicable to the Securities purchased by such Underwriters hereunder and (z) no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 9, each person who controls an Underwriter within the meaning of the Act shall have the same rights to contribution as such Underwriter, subject to clauses (y) and (z) of this subsection (d).

10. Default by an Underwriter. If any one or more Underwriters shall fail to purchase and pay for any of the Securities agreed to be purchased by such Underwriter or Underwriters hereunder and such failure to purchase shall constitute a default in the performance of its or their obligations under this Agreement, the remaining Underwriters shall be obligated severally to take up and pay for (in the respective proportions which the principal amount of Securities set forth opposite their names in Schedule II hereto bear to the aggregate principal amount of Securities set forth opposite the names of all the remaining Underwriters) the Securities which the defaulting Underwriter or Underwriters agreed but failed to purchase; provided, however, that in the event that the aggregate principal amount of Securities which the defaulting Underwriter or Underwriters agreed but failed to purchase shall exceed 10% of the aggregate principal amount of Securities set forth in Schedule II hereto, the remaining Underwriters shall have the right to purchase all, but shall not be under any obligation to purchase any, of the Securities, and if such nondefaulting Underwriters do not purchase all the Securities, this Agreement will terminate without liability to any nondefaulting Underwriter or the Republic; provided

 

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further, however, that if within 24 hours after such default by such Underwriter or Underwriters holding in excess of 10% of the aggregate principal amount of the Securities set forth in Schedule I the nondefaulting Underwriters shall not have agreed to purchase all of the Securities, then the Republic shall be entitled to a further period of 36 hours within which to procure another party or parties satisfactory to the Underwriters to purchase the Securities to be purchased by such defaulting Underwriter or Underwriters. In the event of a default by any Underwriter as set forth in this Section 10, the Closing Date shall be postponed for such period, not exceeding seven calendar days, as the Representatives or the Republic shall determine in order that any required changes in the Registration Statement and the Prospectus or in any other documents or arrangements may be effected. Nothing contained in this Agreement shall relieve any defaulting Underwriter of its liability, if any, to the Republic and any nondefaulting Underwriter for damages occasioned by its default hereunder. The term “Underwriter” as used herein includes any person substituted under this Section with like effect as if such person had originally been a party to this Agreement with respect to such Securities.

11. Termination. This Agreement shall be subject to termination in the absolute discretion of the Representatives (after consultation with the Republic), by notice given to the Republic prior to delivery of and payment for all the Securities, if after the execution and delivery of this Agreement and prior to such time (i) existing financial, political or economic conditions in the United States, Colombia, or elsewhere, or Colombian exchange rates or exchange controls shall have undergone any materially adverse change which, in the opinion of the Representatives, would materially adversely affect the market for the Securities, or (ii) trading in securities generally on the New York Stock Exchange shall have been suspended or limited or minimum prices shall have been established on such exchange, trading in any securities of the Republic on any exchange or in the over-the-counter market in the United States or in the Republic shall have been suspended or limited, or (iii) a major disruption of the settlement or clearance of debt securities in the United States shall occur and continue until at least the business day preceding the Closing Date, and such event shall make it impractical to proceed with the closing, or (iv) a banking moratorium shall have been declared either by U.S. federal or New York State or Colombian authorities.

12. Representations and Indemnities to Survive. The respective agreements, representations, warranties, indemnities, rights of contribution and other statements of the Republic and of the Underwriters set forth in or made pursuant to this Agreement will remain in full force and effect, regardless of any investigation made by or on behalf of any Underwriter or the Republic or any of the controlling persons referred to in Section 9 hereof, and will survive delivery of and payment for the Securities. The provisions of Sections 8 and 9 hereof shall survive the termination or cancellation of this Agreement.

13. Notices. Except as otherwise expressly provided in this Agreement, all communications hereunder will be in writing and effective only on receipt, and, if sent to the Representatives, will be mailed, delivered or sent by facsimile, at the address specified in Schedule I hereto; or, if sent to the Republic, will be mailed, delivered or sent by facsimile to the Director General of Public Credit and National Treasury, Ministerio de Hacienda y Crédito Público, Dirección General de Crédito Público y Tesoro Nacional, Carrera 8, No. 6C-38, Piso 1, Bogotá D.C., Colombia.

 

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14. Successors. This Agreement will inure to the benefit of and be binding upon the parties hereto and their respective successors and the controlling persons referred to in Section 9 hereof, and no other person will have any right or obligation hereunder. No purchaser of any Security from any Underwriter shall be deemed to be a successor or assign merely by reason of such purchase. This Agreement may not be assigned by any party hereto without the prior written consent of each of the other parties hereto. Any purported assignment of this Agreement in contravention of this Section 14 shall be null and void.

15. Applicable Law. This Agreement will be governed by and construed in accordance with the laws of the State of New York, except that all matters governing authorization and execution by the Republic shall be governed by the laws of the Republic.

16. Jurisdiction of Courts of New York and the Republic. The Republic hereby appoints the Consul General of the Republic in The City of New York, presently located at 10 East 46th Street, in New York, New York, as its authorized agent (the “Authorized Agent”) upon which process may be served in any action by any Underwriter, or by any persons controlling such Underwriters, arising out of or based upon this Agreement, which may be instituted in any state or federal court in the Borough of Manhattan, The City of New York, New York, and, subject to the last sentence of this Section 16, the Republic expressly accepts the jurisdiction of any such court in respect of such action. Such appointment shall be irrevocable as long as any of the Securities remain outstanding unless and until the appointment of a successor Authorized Agent and such successor’s acceptance of such appointment shall have occurred. The Republic will take any and all action, including the filing of any and all documents and instruments, that may be necessary to continue such appointment or appointments in full force and effect as aforesaid. Service of process upon the Authorized Agent and written notice of such service mailed or delivered to the Director General of Public Credit and National Treasury, Ministerio de Hacienda y Crédito Público, Dirección General de Crédito Público y Tesoro Nacional, Carrera 8, No. 6C-38, Piso 1, Bogotá D.C. , the Republic, shall be deemed in every respect effective service of process upon the Republic. Notwithstanding the foregoing, any action by any Underwriter based upon this Agreement may be instituted by any Underwriter in any competent court in the Republic. The Republic hereby waives irrevocably, to the fullest extent permitted by law, any immunity from jurisdiction (except for immunity from execution on a judgment) to which it might otherwise be entitled in any action arising out of or based on this Agreement which may be instituted as provided in this Section 16 in any state or federal court in The City of New York, New York, or in any competent court in the Republic subject to the terms, conditions, limitations or exceptions under (i) Articles 192, 195, 298 and 299 of Law 1437 of 2011 (Código de Procedimiento Administrativo y de lo Contencioso Administrativo) as amended by Articles 80, 81 and 87 of Law 2080 of 2021; and (ii) Articles 593, 594 and 595 et al of Law 1564 of 2012 (Código General del Proceso) and Article 19 of Decree 111 of January 15, 1996, pursuant to which the revenues, assets and

 

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property of the Republic located in the Republic are not subject to execution, set-off or attachment. The Republic hereby irrevocably and unconditionally waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of venue of any aforesaid action arising out of or in connection with this Agreement brought in any such court and hereby further, to the fullest extent permitted by law, irrevocably waives and agrees not to plead or claim in any such court that any such action brought in any such court has been brought in an inconvenient forum. The Republic hereby reserves the right to plead sovereign immunity under the United States Foreign Sovereign Immunities Act of 1976 with respect to actions brought against it under United States securities laws or any state securities laws.

17. Underwriters Not Fiduciaries. The Republic acknowledges and agrees that (i) the purchase and sale of the Securities pursuant to this Agreement is an arm’s-length commercial transaction between the Republic, on the one hand, and the Underwriters, on the other, (ii) in connection therewith and with the process leading to such transaction, each Underwriter is acting solely as a principal and not the agent or fiduciary of the Republic, (iii) no Underwriter has assumed an advisory or fiduciary responsibility in favor of the Republic with respect to the offering contemplated hereby or the process leading thereto (irrespective of whether such Underwriter has advised or is currently advising the Republic on other matters) or any other obligation to the Republic except the obligations expressly set forth in this Agreement and (iv) the Republic has consulted its own legal and financial advisors to the extent it deemed appropriate. The Republic agrees that it will not claim that the Underwriters, or any of them, has rendered advisory services of any nature or respect, or owes a fiduciary or similar duty to the Republic, in connection with such transaction or the process leading thereto.

18. Agreement Supersedes Prior Agreements. This Agreement supersedes all prior agreements and understandings (whether written or oral) between the Republic and the Underwriters, or any of them, with respect to the subject matter hereof.

19. Waiver of Jury Trial. The Republic and each of the Underwriters hereby irrevocably waive, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.

20. Representation of Underwriters. The Representatives will act for the several Underwriters in connection with this offering of Securities, and any action under this Agreement taken by the Representatives jointly will be binding upon all the Underwriters.

21. Currency. If for the purpose of obtaining judgment in any court it is necessary to convert a sum due hereunder in U.S. dollars into another currency, the parties hereto agree, to the fullest extent that they may effectively do so (and, subject to Title III, Chapter II, Section 1 of the Foreign Exchange Regulations of Colombia (External Resolution No. 1 of 2018 of the Board of Governors of the Central Bank of Colombia)), that the rate of exchange used shall be that at which in accordance with normal banking procedures the payee could purchase U.S. dollars with such other

 

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currency in The City of New York on the business day preceding the day on which final judgment is given. The obligation of either party in respect of a sum due from it to the other party hereunder shall, notwithstanding any judgment in a currency (the “Judgment Currency”) other than U.S. dollars, be discharged only to the extent that on the business day following receipt by such other party of any sum adjudged to be so due in the Judgment Currency such other party may in accordance with normal banking procedures purchase U.S. dollars with the Judgment Currency; if the amount of U.S. dollars so purchased is less than the sum originally due to such other party in U.S. dollars, such first party agrees, as a separate obligation and notwithstanding any such judgment, to indemnify such other party against such loss, and if the amount of U.S. dollars so purchased exceeds the sum originally due to such other party, such other party agrees to remit to such first party such excess.

22. Recognition of the U.S. Special Resolution Regimes.

(a) In the event that any Underwriter that is a Covered Entity (as defined below) becomes subject to a proceeding under a U.S. Special Resolution Regime (as defined below), the transfer from such Underwriter of this Agreement, and any interest and obligation in or under this Agreement, will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if this Agreement, and any such interest and obligation, were governed by the laws of the United States or a state of the United States.

(b) In the event that any Underwriter that is a Covered Entity or a BHC Act Affiliate (as defined below) of such Underwriter becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under this Agreement that may be exercised against such Underwriter are permitted to be exercised to no greater extent than such Default Rights (as defined below) could be exercised under the U.S. Special Resolution Regime if this Agreement were governed by the laws of the United States or a state of the United States.

As used in this Section 22:

“BHC Act Affiliate” has the meaning assigned to the term “affiliate” in, and shall be interpreted in accordance with, 12 U.S.C. § 1841(k).

“Covered Entity” means any of the following:

 

(i)

a “covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b);

 

(ii)

a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b); or

 

(iii)

a “covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b).

 

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“Default Right” has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable.

“U.S. Special Resolution Regime” means each of (i) the Federal Deposit Insurance Act and the regulations promulgated thereunder and (ii) Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the regulations promulgated thereunder.

23. Contracts with the Republic. In accordance with the legal requirements of the Republic relating to contracts with the Republic, the Underwriters shall be deemed to have waived any right to petition for diplomatic claims to be asserted by their governments against the Republic, except in the case of denial of justice, with respect to rights of the Underwriters hereunder.

24. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original regardless of whether delivered in physical or electronic form; but such counterparts shall together constitute but one and the same instrument. The exchange of copies of this Agreement and of signature pages by facsimile, by portable document format (PDF) or by electronic mail (including any electronic signature covered by the U.S. federal ESIGN Act of 2000, Uniform Electronic Transactions Act, the Electronic Signatures and Records Act or other applicable law, or other transmission method) transmission shall constitute effective execution and delivery of this Agreement as to the parties hereto and may be used in lieu of the original Agreement and signature pages for all purposes.

 

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If the foregoing is in accordance with your understanding of our agreement, please sign and return to us the enclosed duplicate hereof, whereupon this letter and your acceptance shall represent a binding agreement among the Republic and the several Underwriters.

 

[Signature Page to Underwriting Agreement]

The foregoing Agreement is hereby

confirmed and accepted as of the

date specified in Schedule I hereto.

 

BBVA Securities Inc.
By:		/s/ Surya Bhattacharjee
Name: Surya Bhattacharjee
Title: Managing Director
Itau BBA USA Securities, Inc.
By:		/s/ Ricardo Navarro
Name: Ricardo Navarro
Title: Managing Director
By:		/s/ Matthew Dukes
Name: Matthew Dukes
Title: Managing Director
J.P. Morgan Securities LLC
By:		/s/ Lisandro Miguens
Name: Lisandro Miguens
Title: Managing Director

[Signature Page to Underwriting Agreement]

SCHEDULE I

 

Underwriting Agreement dated:		January 24, 2023
Indenture:		Indenture, dated as of January 28, 2015, as amended and supplemented by the First Supplemental Indenture, dated as of September 8, 2015, between the Republic of Colombia and The Bank of New York Mellon, as Trustee
Representatives and addresses:		BBVA Securities Inc. 1345 Avenue of the Americas, 44th Floor New York, New York 10105 Attention: Latin America Debt Capital Markets Facsimile: +1 (212) 258-2216   Itau BBA USA Securities, Inc. 540 Madison Avenue, 24th Floor New York, New York 10022 Attention: International Debt Capital Markets / Copy to Legal Department Facsimile: +1 (212) 207-9076   J.P. Morgan Securities LLC 383 Madison Avenue, 6th Floor New York, New York 10179 Attention: Latin America Debt Capital Markets
Title:		7.500% Global Bonds due 2034 (the “Securities”)
Aggregate principal amount:		U.S.$2,200,000,000
Issue date:		February 2, 2023
Maturity date:		February 2, 2034
Interest rate:		7.500% per annum
Interest payment dates:		August 2 and February 2 of each year, commencing August 2, 2023, to the holders of record on July 18 and January 18 preceding each payment date

Currency of denomination:		U.S. dollars
Currency of payment:		U.S. dollars
Form(s) and denomination(s):		Registered form only, in denominations of U.S.$200,000 or integral multiples of U.S. $1,000 in excess thereof (initially, all the Securities will be delivered and held in global form through a nominee of The Depository Trust Company).
Sinking fund provisions:		None
Optional redemption provision:		Prior to November 2, 2033 (three months prior to the Maturity Date) (the “Par Call Date”), the Republic may redeem the Securities at its option, in whole or in part, at any time and from time to time, at a redemption price (expressed as a percentage of principal amount and rounded to three decimal places) equal to the greater of:   (1) (a) the sum of the present values of the remaining scheduled payments of principal and interest thereon discounted to the redemption date (assuming the Securities matured on the Par Call Date) on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 50 basis points less (b) interest accrued to the date of redemption, and   (2) 100% of the principal amount of the Securities to be redeemed,   plus, in either case, accrued and unpaid interest thereon to, but excluding, the redemption date.   On or after the Par Call Date, the Republic may redeem the Securities, in whole or in part, at any time and from time to time, at a redemption price equal to 100% of the principal amount of the Securities being redeemed plus accrued and unpaid interest thereon to, but excluding, the redemption date.

		“Treasury Rate” means, with respect to any redemption date, the yield determined by the Republic in accordance with the following two paragraphs.   The Treasury Rate shall be determined by the Republic after 4:15 p.m., New York City time (or after such time as yields on U.S. government securities are posted daily by the Board of Governors of the Federal Reserve System), on the third business day preceding the redemption date based upon the yield or yields for the most recent day that appear after such time on such day in the most recent statistical release published by the Board of Governors of the Federal Reserve System designated as “Selected Interest Rates (Daily) - H.15” (or any successor designation or publication) (“H.15”) under the caption “U.S. government securities–Treasury constant maturities–Nominal” (or any successor caption or heading). In determining the Treasury Rate, the Republic shall select, as applicable: (1) the yield for the Treasury constant maturity on H.15 exactly equal to the period from the redemption date to the Par Call Date (the “Remaining Life”); or (2) if there is no such Treasury constant maturity on H.15 exactly equal to the Remaining Life, the two yields – one yield corresponding to the Treasury constant maturity on H.15 immediately shorter than and one yield corresponding to the Treasury constant maturity on H.15 immediately longer than the Remaining Life – and shall interpolate to the Par Call Date on a straight-line basis (using the actual number of days) using such yields and rounding the result to three decimal places; or (3) if there is no such Treasury constant maturity on H.15 shorter than or longer than the Remaining Life, the yield for the single Treasury constant maturity on H.15 closest to the Remaining Life. For purposes of this paragraph, the applicable Treasury constant maturity or maturities on H.15 shall be deemed to have a maturity date equal to the relevant number of months or years, as applicable, of such Treasury constant maturity from the redemption date.

		If on the third business day preceding the redemption date H.15 or any successor designation or publication is no longer published, the Republic shall calculate the Treasury Rate based on the rate per annum equal to the semi-annual equivalent yield to maturity at 11:00 a.m., New York City time, on the second business day preceding such redemption date of the United States Treasury security maturing on, or with a maturity that is closest to, the Par Call Date, as applicable. If there is no United States Treasury security maturing on the Par Call Date but there are two or more United States Treasury securities with a maturity date equally distant from the Par Call Date, one with a maturity date preceding the Par Call Date and one with a maturity date following the Par Call Date, the Republic shall select the United States Treasury security with a maturity date preceding the Par Call Date. If there are two or more United States Treasury securities maturing on the Par Call Date or two or more United States Treasury securities meeting the criteria of the preceding sentence, the Republic shall select from among these two or more United States Treasury securities the United States Treasury security that is trading closest to par based upon the average of the bid and asked prices for such United States Treasury securities at 11:00 a.m., New York City time. In determining the Treasury Rate in accordance with the terms of this paragraph, the semi-annual yield to maturity of the applicable United States Treasury security shall be based upon the average of the bid and asked prices (expressed as a percentage of principal amount) at 11:00 a.m., New York City time, of such United States Treasury security, and rounded to three decimal places.

		The Republic’s actions and determinations in determining the redemption price shall be conclusive and binding for all purposes, absent manifest error.   Notice of any redemption will be mailed or electronically delivered (or otherwise transmitted in accordance with the depositary’s procedures) at least 10 days but not more than 60 days before the redemption date to each holder of Securities to be redeemed. A notice of redemption will specify the redemption date and may provide that it is subject to certain conditions that will be specified in the notice. If those conditions are not met, the redemption notice will be of no effect and the Republic will not be obligated to redeem the Securities.   In the case of a partial redemption, selection of the Securities for redemption will be made pro rata, by lot or by such other method in accordance with the policies and procedures of the depositary. No Securities of a principal amount of $200,000 or less will be redeemed in part. If any Security is to be redeemed in part only, the notice of redemption that relates to the Securities will state the portion of the principal amount of the Securities to be redeemed. A new note in a principal amount equal to the unredeemed portion of the Securities will be issued in the name of the holder of the note upon surrender for cancellation of the original note. For so long as the Securities are held by DTC (or another depositary), the redemption of the Securities shall be done in accordance with the policies and procedures of the depositary.   Unless the Republic defaults in payment of the redemption price, on and after the redemption date interest will cease to accrue on the Securities or portions thereof called for redemption.

Warrant provisions:		None.
Other provisions:		None.
Ratings:		[Intentionally Omitted]
Price to public:		99.263% of the principal amount of the Securities, plus accrued interest, if any, from February 2, 2023.
Underwriters’ commission in the form of a discount:		0.200% of the principal amount of the Securities
Purchase price to Underwriters:		99.063% of the principal amount of the Securities, plus accrued interest, if any, from February 2, 2023.
Manner of payment:		Wire transfer to an account designated by the Republic. The Underwriters shall, on behalf of the Republic, pay certain expenses in connection with the offering of the Securities. The Republic will reimburse the Underwriters for certain expenses pursuant to an expense side letter to be dated February 2, 2023.
Closing Date, time and location:		February 2, 2023 at the offices of Sullivan & Cromwell LLP 125 Broad Street New York, New York 10004
Securities exchange(s):		Application will be made to list the Securities on the official list of the Luxembourg Stock Exchange and to trade them on the Euro MTF Market of the Luxembourg Stock Exchange.
Trustee:		The Bank of New York Mellon.

SCHEDULE II

 

		Principal Amount of Securities(I)
BBVA Securities Inc.		U.S.$	733,333,000
Itau BBA USA Securities, Inc.		U.S.$	733,333,000
J.P. Morgan Securities LLC		U.S.$	733,334,000
Total		U.S.$	2,200,000,000

 

(I)

The aggregate principal amount of Securities includes an amount intended to fund the purchase of outstanding Reinvestment Tenders and Simple Tenders (as such terms are defined in the Offer to Purchase, dated January 24, 2023, of the Republic) in the concurrent tender offer pursuant to the Offer to Purchase, based on final acceptances in the tender offer.

The amount of Securities to be issued to fund the purchase of the Old Bonds (as such terms are defined in the Offer to Purchase, dated January 24, 2023, of the Republic) is subject to adjustment. The results of any such adjustment shall constitute the binding agreement of the parties hereto and shall be reflected in the Final Term Sheet to be filed with the Commission on January 25, 2023, in the form set forth in Schedule IV hereto.

 

S-7

SCHEDULE III

 

(a)	the Issuer Free Writing Prospectuses included in the Pricing Disclosure Package:

 

•

Preliminary term sheet for the Securities, to be filed with the Commission on January 25, 2023, substantially in the form set forth in Schedule IV hereto.

 

•

Final term sheet for the Securities, to be filed with the Commission on January 25, 2023, substantially in the form set forth in Schedule IV hereto.

 

(b)	Additional Documents incorporated by reference: None.

 

(c)	Issuer Free Writing Prospectuses not included in the Pricing Disclosure Package: None.

 

S-8

SCHEDULE IV

Filed pursuant to Rule 433

Registration Statement No. 333-253587

Relating to Preliminary Prospectus Supplement dated January 24, 2023

Republic of Colombia

Preliminary Term Sheet

U.S.$2,200,000,000 7.500% Global Bonds due 2034*

 

Issuer:		Republic of Colombia (“Republic”)
Transaction:		7.500% Global Bonds due 2034 (the “Securities”)
Expected Issue Ratings**:		[Intentionally Omitted]
Format:		SEC-Registered
Principal Amount:		U.S.$2,200,000,000
Pricing Date:		January 24, 2023
Settlement Date:		Thursday, February 2, 2023 (T+7)
Maturity Date:		February 2, 2034
Interest Payment Dates:		August 2 and February 2 of each year, commencing on August 2, 2023, to the holders of record on July 18 and January 18 preceding each payment date
Benchmark Treasury:		4.125% UST due November, 2032
Benchmark Treasury Price and Yield:		105-16+ and 3.456%
Spread to Benchmark Treasury:		+414.4 bps
Yield to Maturity:		7.600%
Coupon:		7.500%
Price to Public:		99.263%, not including accrued interest
Gross Proceeds (before underwriting discount and expenses) to Issuer***:		U.S.$2,183,786,000
Day Count:		30/360
Denominations:		U.S.$200,000 and increments of U.S.$1,000 in excess thereof
Optional Redemption:		Prior to November 2, 2033 (three months prior to the Maturity Date) (the “Par Call Date”), the Republic may redeem the Securities at its option, in whole or in part, at any time and from time to time, at a redemption price (expressed as a percentage of principal amount and rounded to three decimal places) equal to the greater of:   (1) (a) the sum of the present values of the remaining scheduled payments of principal and interest thereon discounted to the redemption date (assuming the Securities matured on the Par Call Date) on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 50 basis points less (b) interest accrued to the date of redemption, and

 

S-9

		(2) 100% of the principal amount of the Securities to be redeemed,   plus, in either case, accrued and unpaid interest thereon to, but excluding, the redemption date.   On or after the Par Call Date, the Republic may redeem the Securities, in whole or in part, at any time and from time to time, at a redemption price equal to 100% of the principal amount of the Securities being redeemed plus accrued and unpaid interest thereon to, but excluding, the redemption date.   “Treasury Rate” means, with respect to any redemption date, the yield determined by the Republic as described under “Description of the Bonds—Optional Redemption” in the preliminary prospectus supplement.
Listing and Trading:		Application will be made to list the Securities on the official list of the Luxembourg Stock Exchange and to trade on the Euro MTF Market.
Joint Book-Running Managers:		BBVA Securities Inc. Itau BBA USA Securities, Inc. J.P. Morgan Securities LLC
Preliminary Prospectus Supplement:		https://www.sec.gov/Archives/edgar/data/917142/000119312523013730/d441552d424b3.htm
Clearing:		DTC and its participants, including the depositaries for Euroclear Bank S.A./N.V. as operator of the Euroclear System plc, and Clearstream Banking, société anonyme
CUSIP/ISIN:		195325EG6/US195325EG61

 

*

Note: The aggregate principal amount of Securities includes an amount intended to fund the purchase of outstanding Reinvestment Tenders and Simple Tenders (as such terms are defined in the Offer to Purchase, dated January 24, 2023, of the Republic) in the concurrent tender offer pursuant to the Offer to Purchase, based on final acceptances in the tender offer. The Republic will announce the amount of Reinvestment Tenders and Simple Tenders that it is accepting on January 25, 2023, or as soon as possible thereafter.

**	Note: A securities rating is not a recommendation to buy, sell or hold securities and may be subject to suspension, reduction, revision or withdrawal at any time.

***	Note: The gross proceeds amount may be adjusted in proportion to the adjustment, if any, to be made to the aggregate amount of Securities.

 

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The issuer has filed a registration statement (including a prospectus) with the Securities and Exchange Commission for the offering to which this communication relates. Before you invest, you should read the prospectus in that registration statement and other documents the issuer has filed with the Securities and Exchange Commission for more complete information about the issuer and this offering. You may get these documents for free by visiting EDGAR on the Web site of the Securities and Exchange Commission at www.sec.gov. Alternatively, the issuer, any underwriter or any dealer participating in the offering will arrange to send you the prospectus if you request it by calling BBVA Securities Inc. toll-free at +1 (800) 422-8692, Itau BBA USA Securities, Inc. toll-free at +1 (888) 770-4828 or J.P. Morgan Securities LLC toll-free at +1 (866) 846-2874.

No EEA or UK PRIIPs KID – No EEA or UK PRIIPs key information document (KID) has been prepared as the Securities are not available to retail investors in the EEA or the UK. See “Prohibition of Sales to EEA Retail Investors” and “Prohibition of Sales to UK Retail Investors” in the preliminary prospectus supplement.

ANY DISCLAIMERS OR OTHER NOTICES THAT MAY APPEAR BELOW ARE NOT APPLICABLE TO THIS COMMUNICATION AND SHOULD BE DISREGARDED. SUCH DISCLAIMERS OR OTHER NOTICES WERE AUTOMATICALLY GENERATED AS A RESULT OF THIS COMMUNICATION BEING SENT VIA BLOOMBERG OR ANOTHER EMAIL SYSTEM.

 

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Filed pursuant to Rule 433

Registration Statement No. 333-253587

Relating to Preliminary Prospectus Supplement dated January 24, 2023

Republic of Colombia

Final Term Sheet

U.S.$2,200,000,000 7.500% Global Bonds due 2034

 

Issuer:		Republic of Colombia (“Republic”)
Transaction:		7.500% Global Bonds due 2034 (the “Securities”)
Expected Issue Ratings*:		[Intentionally Omitted]
Format:		SEC-Registered
Principal Amount:		U.S.$2,200,000,000
Pricing Date:		January 24, 2023
Settlement Date:		Thursday, February 2, 2023 (T+7)
Maturity Date:		February 2, 2034
Interest Payment Dates:		August 2 and February 2 of each year, commencing on August 2, 2023, to the holders of record on July 18 and January 18 preceding each payment date
Benchmark Treasury:		4.125% UST due November, 2032
Benchmark Treasury Price and Yield:		105-16+ and 3.456%
Spread to Benchmark Treasury:		+414.4 bps
Yield to Maturity:		7.600%
Coupon:		7.500%
Price to Public:		99.263%, not including accrued interest
Gross Proceeds (before underwriting discount and expenses) to Issuer:		U.S.$2,183,786,000
Day Count:		30/360
Denominations:		U.S.$200,000 and increments of U.S.$1,000 in excess thereof
Optional Redemption:		Prior to November 2, 2033 (three months prior to the Maturity Date) (the “Par Call Date”), the Republic may redeem the Securities at its option, in whole or in part, at any time and from time to time, at a redemption price (expressed as a percentage of principal amount and rounded to three decimal places) equal to the greater of:   (1) (a) the sum of the present values of the remaining scheduled payments of principal and interest thereon discounted to the redemption date (assuming the Securities matured on the Par Call Date) on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 50 basis points less (b) interest accrued to the date of redemption, and

 

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		(2) 100% of the principal amount of the Securities to be redeemed,   plus, in either case, accrued and unpaid interest thereon to, but excluding, the redemption date.   On or after the Par Call Date, the Republic may redeem the Securities, in whole or in part, at any time and from time to time, at a redemption price equal to 100% of the principal amount of the Securities being redeemed plus accrued and unpaid interest thereon to, but excluding, the redemption date.   “Treasury Rate” means, with respect to any redemption date, the yield determined by the Republic as described under “Description of the Bonds—Optional Redemption” in the preliminary prospectus supplement.
Listing and Trading:		Application will be made to list the Securities on the official list of the Luxembourg Stock Exchange and to trade on the Euro MTF Market.
Joint Book-Running Managers:		BBVA Securities Inc. Itau BBA USA Securities, Inc. J.P. Morgan Securities LLC
Preliminary Prospectus Supplement:		https://www.sec.gov/Archives/edgar/data/917142/000119312523013730/d441552d424b3.htm
Clearing:		DTC and its participants, including the depositaries for Euroclear Bank S.A./N.V. as operator of the Euroclear System plc, and Clearstream Banking, société anonyme
CUSIP/ISIN:		195325EG6/US195325EG61

 

*	Note: A securities rating is not a recommendation to buy, sell or hold securities and may be subject to suspension, reduction, revision or withdrawal at any time.

The issuer has filed a registration statement (including a prospectus) with the Securities and Exchange Commission for the offering to which this communication relates. Before you invest, you should read the prospectus in that registration statement and other documents the issuer has filed with the Securities and Exchange Commission for more complete information about the issuer and this offering. You may get these documents for free by visiting EDGAR on the Web site of the Securities and Exchange Commission at www.sec.gov. Alternatively, the issuer, any underwriter or any dealer participating in the offering will arrange to send you the prospectus if you request it by calling BBVA Securities Inc. toll-free at +1 (800) 422-8692, Itau BBA USA Securities, Inc. toll-free at +1 (888) 770-4828 or J.P. Morgan Securities LLC toll-free at +1 (866) 846-2874.

 

S-13

No EEA or UK PRIIPs KID – No EEA or UK PRIIPs key information document (KID) has been prepared as the Securities are not available to retail investors in the EEA or the UK. See “Prohibition of Sales to EEA Retail Investors” and “Prohibition of Sales to UK Retail Investors” in the preliminary prospectus supplement.

ANY DISCLAIMERS OR OTHER NOTICES THAT MAY APPEAR BELOW ARE NOT APPLICABLE TO THIS COMMUNICATION AND SHOULD BE DISREGARDED. SUCH DISCLAIMERS OR OTHER NOTICES WERE AUTOMATICALLY GENERATED AS A RESULT OF THIS COMMUNICATION BEING SENT VIA BLOOMBERG OR ANOTHER EMAIL SYSTEM.

 

S-14

Exhibit 2

REPUBLIC OF COLOMBIA

UNLESS THIS REGISTERED GLOBAL BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (“DTC”), 55 WATER STREET, 49TH FLOOR, NEW YORK, NY 10041-0099, TO THE REPUBLIC OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY BOND ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS NOMINATED BY AN AUTHORIZED REPRESENTATIVE OF DTC, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

UNLESS AND UNTIL THIS BOND IS EXCHANGED IN WHOLE FOR BONDS IN CERTIFICATED REGISTERED FORM, THIS BOND MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY DTC TO A NOMINEE OF DTC OR BY A NOMINEE OF DTC TO DTC OR ANOTHER NOMINEE OF DTC OR BY DTC OR ANY SUCH NOMINEE TO A SUCCESSOR OF DTC OR A NOMINEE OF SUCH SUCCESSOR.

REGISTERED GLOBAL SECURITIES

representing

U.S. $2,200,000,000

7.500% Global Bonds due 2034

 

No. R-[•]		U.S. $[•]

CUSIP No.: 195325EG6

ISIN No.: US195325EG61

The Republic of Colombia (the “Republic”), for value received, hereby promises to pay to Cede & Co., or registered assigns, upon surrender hereof the principal sum of [•] (U.S. $[•]) or such amount as shall be the outstanding principal amount hereof on February 2, 2034, together with interest accrued from the issue date to, but excluding, the maturity date, or on such earlier date as the principal hereof may become due in accordance with the provisions hereof and to pay the redemption amount in connection with any optional redemption as provided in paragraph 3 of the attached Terms of the Bonds. The Republic further unconditionally promises to pay interest semi-annually in arrears on February 2 and August 2 in each year (each an “Interest Payment Date”), commencing August 2, 2023, on any outstanding portion of the unpaid principal amount hereof at 7.500% per annum. Interest shall accrue from and including the most recent date to which interest has been paid or duly provided for, or, if no interest has been paid or duly provided for, from February 2, 2023 until payment of said principal sum has been made or duly provided for, and shall be payable to Holders of record as of January 18 and July 18 of each year (each, a “Record Date”). This is a Global Security deposited with the Depositary, and registered in the name of the Depositary or its nominee or common custodian, and accordingly, the

 

1

Depositary or its nominee or common custodian, as Holder of record of this Global Security, shall be entitled to receive payments of principal and interest, other than principal and interest due at the maturity date, by wire transfer of immediately available funds. Such payment shall be made exclusively in such coin or currency of the United States as at the time of payment shall be legal tender for payment of public and private debts. The Republic, the Trustee, any registrar and any paying agent shall be entitled to treat the Depositary as the sole Holder of this Global Securities.

The statements in the legend relating to the Depositary set forth above are an integral part of the terms of this Global Security and by acceptance hereof each Holder of this Global Security agrees to be subject to and bound by the terms and provisions set forth in such legend, if any.

This Global Security is issued in respect of an issue of U.S. $2,200,000,000 principal amount of 7.500% Global Bonds due 2034 of the Republic and is governed by (i) the Indenture dated as January 28, 2015 as supplemented by the First Supplemental Indenture thereto, dated September 8, 2015 (so supplemented, the “Indenture”) between the Republic and The Bank of New York Mellon, as trustee (the “Trustee”), the terms of which Indenture are incorporated herein by reference, and (ii) by the Terms of the Bonds (as defined in the Indenture) and attached hereto. This Global Security shall in all respects be entitled to the same benefits as other Bonds (as defined in the Terms) under the Indenture and the Terms. All capitalized terms used in this Global Security but not defined shall have the meanings assigned to them in the Indenture.

Upon any exchange of all or a portion of this Global Security for Certificated Securities in accordance with the Indenture, this Global Security shall be endorsed on Schedule A to reflect the change of the principal amount evidenced hereby.

Unless the certificate of authentication hereon has been executed by the Trustee, this Global Security shall not be valid or obligatory for any purpose.

[Remainder of the page intentionally left in blank]

 

 

2

IN WITNESS WHEREOF, the Republic has caused this instrument to be duly executed.

 

Dated: February 2, 2023				REPUBLIC OF COLOMBIA
				By
						José Antonio Ocampo Gaviria Minister of Finance and Public Credit
				By
						José Roberto Acosta Ramos Director General of Public Credit and National Treasury of the Ministry of Finance and Public Credit

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

This is one of the Bonds issued under the within-mentioned Indenture.

 

Dated: February 2, 2023
						THE BANK OF NEW YORK MELLON, not in its individual capacity but solely as Trustee
						By: Authorized Officer

[Signature Page to 2034 Global Bond R-[•]]

 

Schedule A

 

Date		Principal Amount of Certificated Securities		Remaining Principal Amount of this Global Security		Notation Made By

 

4

TERMS OF THE BONDS

1. General. (a) This Bond is one of a duly authorized Series of debt securities of the Republic of Colombia (the “Republic”), designated as its 7.500% Global Bonds due 2034 (each Bond of this Series a “Bond”, and collectively, the “Bonds”), and issued or to be issued in one or more Series pursuant to an Indenture dated as of January 28, 2015, between the Republic and The Bank of New York Mellon, as trustee (the “Trustee”), as supplemented by the First Supplemental Indenture thereto, dated September 8, 2015 and as further amended from time to time (as so supplemented and amended, the “Indenture”). The aggregate principal amount of the Bonds is U.S. $2,200,000,000, subject to increase as provided in paragraph 13 below. The Holders of the Bonds will be entitled to the benefits of, be bound by, and be deemed to have notice of, all of the provisions of the Indenture. A copy of the Indenture is on file and may be inspected at the Corporate Trust Office. All capitalized terms used in this Bond but not defined herein shall have the meanings assigned to them in the Indenture.

(b) The Bonds constitute and will constitute direct, general, unconditional, unsecured and unsubordinated External Indebtedness of the Republic for which the full faith and credit of the Republic is pledged. The Bonds rank and will rank without any preference among themselves and equally with all other unsecured and unsubordinated External Indebtedness of the Republic. It is understood that this provision shall not be construed so as to require the Republic to make payments under the Bonds ratably with payments being made under any other External Indebtedness.

(c) The Bonds are in fully registered form, without coupons in denominations of U.S. $200,000 and integral multiples of U.S. $1,000 thereof. The Bonds may be issued in certificated form (each, a “Certificated Security and collectively, the “Certificated Securities”), or may be represented by one or more registered global securities (each, a “Global Security”) held by or on behalf of the Depositary. Certificated Securities will be available only in the limited circumstances set forth in the Indenture. The Bonds, and transfers thereof, shall be registered as provided in Section 2.6 of the Indenture. Any person in whose name a Bond shall be registered may (to the fullest extent permitted by applicable law) be treated at all times, by all persons and for all purposes as the absolute owner of such Bond regardless of any notice of ownership, theft, loss or any writing thereon.

(d) For the purposes of this paragraph and paragraphs 5 and 6 below, the following terms shall have the meanings specified below:

“External Indebtedness” means all obligations for borrowed money, whether present or future, actual or contingent, of a person or for the repayment of which such person, either directly or indirectly, is obliged or otherwise responsible (including such obligations evidenced by bonds, debentures, notes or other similar instruments but excluding any obligation to pay the deferred purchase price of property or services) that are payable, or which at the option of the Holder thereof may be payable, in a currency other than the lawful currency of the Republic.

“Public External Indebtedness” means any External Indebtedness that is in the form of, or represented by, bonds, debentures, notes or other securities which are, or at the time of issue are intended by the Republic to be, quoted, listed or ordinarily purchased and sold on any stock exchange, automated trading system or over-the-counter or other securities market (including, without limiting the generality of the foregoing, securities eligible for resale pursuant to Rule 144A under the Securities Act , as amended (or any successor law or regulation of similar effect)).

 

5

2. Payments. (a) the Republic covenants and agrees that it will duly and punctually pay or cause to be paid the principal of, and premium, if any, and interest (including Additional Amounts (as defined below)) on, the Bonds and any other payments to be made by the Republic under the Bonds and the Indenture, at the place or places, at the respective times and in the manner provided in the Bonds and the Indenture. Principal of the Bonds will be payable against surrender of such Bonds at the Corporate Trust Office of the Trustee in New York City or, subject to applicable laws and regulations, at the office outside of the United States of a paying agent, by U.S. dollar check drawn on, or by transfer to a U.S. dollar account maintained by the Holder with, a bank located in New York City. Payment of interest or principal (including Additional Amounts) on the Bonds will be made to the persons in whose name such Bonds are registered at the close of business on the relevant Record Date, whether or not such day is a Business Day (as defined below), notwithstanding the cancellation of such Bonds upon any transfer or exchange thereof subsequent to the Record Date and prior to such Interest Payment Date; provided that if and to the extent the Republic shall default in the payment of the interest due on such interest payment date, such defaulted interest shall be paid to the persons in whose names such Bonds are registered as of a subsequent record date established by the Republic by notice, as provided in paragraph 12 of these Terms, by or on behalf of the Republic to the Holders of the Bonds not less than 15 days preceding such subsequent record date, such record date to be not less than 10 days preceding the date of payment of such defaulted interest. Notwithstanding the immediately preceding sentence, in the case where such interest or principal (including Additional Amounts) is not punctually paid or duly provided for, the Trustee shall have the right to fix such subsequent record date, and, if fixed by the Trustee, such subsequent record date shall supersede any such subsequent record date fixed by the Republic. Payment of interest on Certificated Securities will be made (i) by a U.S. dollar check drawn on a bank in New York City mailed to the Holder at such Holder’s registered address or (ii) upon application by the Holder of at least U.S. $1,000,000 in principal amount of Certificated Securities to the Trustee not later than the applicable Record Date, by wire transfer in immediately available funds to a U.S. dollar account maintained by the Holder with a bank in New York City. Payment of interest on a Global Security will be made (i) by a U.S. dollar check drawn on a bank in New York City delivered to the Depositary at its registered address or (ii) by wire transfer in immediately available funds to a U.S. dollar account maintained by the Depositary with a bank in New York City. “Business Day” shall mean any day that is not a Saturday or Sunday, and that is not a day on which banking or trust institutions are authorized generally or obligated by law, regulation, or executive order to close in New York City (or in the city where the relevant paying or transfer agent is located).

(b) In any case where the date of payment of the principal of, or interest (including Additional Amounts) on, the Bonds shall not be a Business Day, then payment of principal or interest (including Additional Amounts) will be made on the next succeeding Business Day at the relevant place of payment. Such payments will be deemed to have been made on the due date, and no interest on the Bonds will accrue as a result of the delay in payment. So long as the Trustee holds the funds so deposited and such funds are available to Holders of the Bonds in

 

6

accordance with the terms of the Bonds and the Indenture and Holders of the Bonds are not prevented from claiming such funds in accordance with the terms of the Bonds and the Indenture, the Republic shall not be considered to have defaulted in its obligation to make payment of such amounts on the date on which such amounts become due and payable.

(c) Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months.

(d) Any monies deposited with or paid to the Trustee or to any paying agent for the payment of the principal of or interest (including Additional Amounts) on any Bond and not applied but remaining unclaimed for two years after the date upon which such principal or interest shall have become due and payable shall be repaid to or for the account of the Republic by the Trustee or such paying agent, upon the written request of the Republic and, to the extent permitted by law, the Holder of such Bond shall thereafter look only to the Republic for any payment which such Holder may be entitled to collect, and all liability of the Trustee or such paying agent with respect to such monies shall thereupon cease. The Republic shall cause all returned, unclaimed monies to be held in trust for the relevant Holder of the Bond until such time as the claims against the Republic for payment of such amounts shall have prescribed pursuant to paragraph 14 of these Terms.

(e) If the Republic at any time defaults in the payment of any principal of, or interest (including Additional Amounts), on the Bonds, the Republic will pay interest on the amount in default (to the extent permitted by law), calculated for each day until paid, at the rate of 7.500% per annum, together with Additional Amounts, if applicable.

3. Redemption. (a) Prior to November 2, 2033 (three months prior to the Maturity Date) (the “Par Call Date”), the Bonds will be redeemable, in whole or in part, at any time and from time to time, at the Republic’s option at a redemption price (expressed as a percentage of principal amount and rounded to three decimal places) equal to the greater of (1) (A) the sum of the present values of the remaining scheduled payments of principal and interest thereon (assuming the Bonds matured on the Par Call Date) discounted to the date of redemption specified in the notice of redemption (the “Redemption Date”) on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate (as defined below), plus 50 basis points less (B) interest accrued to, but excluding, the Redemption Date and (2) 100% of the principal amount of the Bonds to be redeemed and, plus, in either case of (1) and (2), accrued and unpaid interest to, but excluding, the Redemption Date. At any time on or after the Par Call Date, the Bonds will be redeemable, in whole or in part at any time and from time to time, at the Republic’s option, at a redemption price equal to 100% of the principal amount of the Bonds to be redeemed, plus accrued and unpaid interest and additional amounts, if any, to, but excluding, the Redemption Date.

(b) For the purposes of this Bond,

“Treasury Rate” means, with respect to any redemption date, the yield determined by the Republic in accordance with the following two paragraphs.

 

7

The Treasury Rate shall be determined by the Republic after 4:15 p.m., New York City time (or after such time as yields on U.S. government securities are posted daily by the Board of Governors of the Federal Reserve System), on the third business day preceding the redemption date based upon the yield or yields for the most recent day that appear after such time on such day in the most recent statistical release published by the Board of Governors of the Federal Reserve System designated as “Selected Interest Rates (Daily)—H.15” (or any successor designation or publication) (“H.15”) under the caption “U.S. government securities–Treasury constant maturities–Nominal” (or any successor caption or heading). In determining the Treasury Rate, the Republic shall select, as applicable: (1) the yield for the Treasury constant maturity on H.15 exactly equal to the period from the redemption date to the Par Call Date (the “Remaining Life”); or (2) if there is no such Treasury constant maturity on H.15 exactly equal to the Remaining Life, the two yields – one yield corresponding to the Treasury constant maturity on H.15 immediately shorter than and one yield corresponding to the Treasury constant maturity on H.15 immediately longer than the Remaining Life – and shall interpolate to the Par Call Date on a straight-line basis (using the actual number of days) using such yields and rounding the result to three decimal places; or (3) if there is no such Treasury constant maturity on H.15 shorter than or longer than the Remaining Life, the yield for the single Treasury constant maturity on H.15 closest to the Remaining Life. For purposes of this paragraph, the applicable Treasury constant maturity or maturities on H.15 shall be deemed to have a maturity date equal to the relevant number of months or years, as applicable, of such Treasury constant maturity from the redemption date.

If on the third business day preceding the redemption date H.15 or any successor designation or publication is no longer published, the Republic shall calculate the Treasury Rate based on the rate per annum equal to the semi-annual equivalent yield to maturity at 11:00 a.m., New York City time, on the second business day preceding such redemption date of the United States Treasury security maturing on, or with a maturity that is closest to, the Par Call Date, as applicable. If there is no United States Treasury security maturing on the Par Call Date but there are two or more United States Treasury securities with a maturity date equally distant from the Par Call Date, one with a maturity date preceding the Par Call Date and one with a maturity date following the Par Call Date, the Republic shall select the United States Treasury security with a maturity date preceding the Par Call Date. If there are two or more United States Treasury securities maturing on the Par Call Date or two or more United States Treasury securities meeting the criteria of the preceding sentence, the Republic shall select from among these two or more United States Treasury securities the United States Treasury security that is trading closest to par based upon the average of the bid and asked prices for such United States Treasury securities at 11:00 a.m., New York City time. In determining the Treasury Rate in accordance with the terms of this paragraph, the semi-annual yield to maturity of the applicable United States Treasury security shall be based upon the average of the bid and asked prices (expressed as a percentage of principal amount) at 11:00 a.m., New York City time, of such United States Treasury security, and rounded to three decimal places.

(c) The Republic will send, or cause to be sent, a notice of redemption to each Holder by first-class mail, postage prepaid, or electronic delivery (or otherwise transmitted in accordance with the depositary’s procedures), at least 10 days but not more than 60 days prior to the Redemption Date, to the address of each Holder of Bonds to be redeemed, as it appears on the

 

8

register maintained by the registrar. A notice of redemption will specify the Redemption Date and may provide that it is subject to certain conditions that will be specified in the notice. If those conditions are not met, the redemption notice will be of no effect and we will not be obligated to redeem the Bonds. In the event that fewer than all of the Bonds are to be redeemed at any time, selection of Bonds for redemption will be pro rata, by lot or by such other method in accordance with the policies and procedures of the depositary. No Bonds of an amount of U.S. $200,000 or less will be redeemed in part. If any Bond is to be redeemed in part only, the notice of redemption that relates to the Bond will state the portion of the principal amount of the Bond to be redeemed. A new Bond in a principal amount equal to the unredeemed portion of the Bond will be issued in the name of the holder of the Bond upon surrender for cancellation of the original Bond. For so long as the Bonds are held by DTC (or another depositary), the redemption of the Bonds shall be done in accordance with the policies and procedures of the depositary. Unless the Republic defaults in the payment of the redemption price, on and after the Redemption Date interest will cease to accrue on the Bonds or portions thereof called for redemption. If the Trustee is to provide notice of redemption to the Holders on behalf of the Republic, it shall be notified in writing or through electronic delivery of such request at least 5 Business Days prior to the date of the giving of such notice (unless a shorter notice shall be satisfactory to the Trustee).

(d) The Bonds (i) are not subject to any sinking fund; and (ii) are not repayable at the option of the Holder prior to maturity (except as provided in paragraph 6 hereof in the event of acceleration).

(e) The Republic’s actions and determinations in determining the redemption price in accordance with this paragraph 3 shall be conclusive and binding for all purposes, absent manifest error.

4. (a) Additional Amounts. All payments by the Republic in respect of the Bonds shall be made without withholding or deduction for or on account of any present or future taxes, duties, assessments or other governmental charges of whatever nature imposed or levied by or on behalf of the Republic, or any political subdivision or taxing authority or agency therein or thereof having the power to tax (collectively, “Relevant Tax”), unless the withholding or deduction of such Relevant Tax is required by law. In that event, the Republic shall pay such additional amounts (“Additional Amounts”), as may be necessary to ensure that the amounts received by the Holders after such withholding or deduction shall equal the respective amounts of principal and interest that would have been receivable in respect of the Bonds in the absence of such withholding or deduction; provided, however, that no such Additional Amounts shall be payable in respect of any Relevant Tax:

(i) imposed by reason of a Holder or beneficial owner of a Bond having some present or former connection with the Republic other than merely being a Holder or beneficial owner of the Bond or receiving payments of any nature on the Bond or enforcing its rights in respect of the Bond;

(ii) imposed by reason of the failure of a Holder or beneficial owner of a Bond, or any other person through which the Holder or beneficial owner holds a Bond, to comply with any certification, identification or other reporting requirement concerning the nationality, residence, identity or connection with the Republic of such Holder or beneficial owner or other person, if compliance with the requirement is a precondition to exemption from all or any portion of such withholding or deduction; or

 

9

(iii) imposed by reason of a Holder or beneficial owner of a Bond, or any other person through which the Holder or beneficial owner holds a Bond, having presented the Bond for payment (where such presentation is required) more than 30 days after the Relevant Date, except to the extent that the Holder or beneficial owner or such other person would have been entitled to Additional Amounts on presenting the Bond for payment on any date during such 30-day period.

As used in this paragraph 4(a), “Relevant Date” in respect of any Bond means the date on which payment in respect thereof first becomes due or, if the full amount of the money payable has not been received by the Trustee on or prior to such due date, the date on which notice is duly given to the Holders in the manner described in paragraph 12 below that such monies have been so received and are available for payment. Any reference to “principal” and/or “interest” hereunder or in the Indenture shall be deemed to include any Additional Amounts which may be payable hereunder.

5. Negative Pledge Covenant of Republic. (a) So long as any Bond forming part of this Series shall remain outstanding or any amount payable by the Republic under the Indenture shall remain unpaid, the Republic will not create any Lien (as defined below) other than Permitted Liens (as defined below) upon the whole or any part of its present or future revenues, properties or assets to secure Public External Indebtedness (as defined below) of the Republic, unless the Bonds are secured equally and ratably with such Public External Indebtedness.

(b) For purposes hereof:

“Lien” means any lien, pledge, mortgage, security interest, deed of trust or charge.

“Permitted Liens” means: (i) any Liens created prior to January 28, 2015, including renewals or refinancing thereof; provided, however, that any renewal or refinancing of any such Liens secures only the renewal or extension of the original secured financing; (ii) any Lien on property to secure Public External Indebtedness arising in the ordinary course of business to finance export, import or other trade transactions, which Public External Indebtedness matures (after giving effect to all renewals and refinancings thereof) not more than one year after the date on which the Public External Indebtedness was originally incurred; (iii) any Liens securing Public External Indebtedness incurred in connection with a Project Financing (as defined below), provided that the Lien is solely on assets or revenues of the project for which the Project Financing was incurred; (iv) any Lien upon any assets or properties (and any revenues therefrom) to secure indebtedness incurred for the purpose of financing the acquisition, development or construction of such asset or property, and any renewal or extension of any such Lien which is limited to the original asset or property (and revenues) covered thereby and which secures any renewal or extension of the original secured financing; (v) any Lien existing on an asset or property (and any revenues therefrom) at the time of its acquisition and any renewal or extension of any such Lien which is limited to the original asset or property (and revenues) covered thereby and which secures any renewal or extension of the original secured financing; and (vi) Liens in addition to those permitted by clauses (i) through (v) above, and any renewal or extension thereof; provided that at any time the aggregate amount of Public External Indebtedness secured by such additional Liens shall not exceed the equivalent of U.S.$14.768 billion.

 

10

“Project Financing” means any financing of all or part of the costs of the acquisition, construction or development of any project if the person or persons providing such financing (A) expressly agree to limit their recourse to the project financed and the revenues derived from such project as the principal source of repayment for the moneys advanced and (B) have been provided with a feasibility study prepared by competent independent experts on the basis of which it was reasonable to conclude that such project would generate sufficient foreign currency income to service substantially all Public External Indebtedness incurred in connection with such project.

6. Events of Default; Acceleration. If one or more of the following events (“Events of Default”) shall have occurred and be continuing (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):

(a) the Republic shall fail to pay any principal of or interest on any Bond when due, and such failure shall continue for 30 days; or

(b) the Republic shall fail duly to perform any other material obligation contained in the Bonds or (with respect to the Bonds) the Indenture, and such failure shall continue for a period of 60 days after the date on which written notice thereof requiring the Republic to remedy the failure shall have been given to the Republic by the Trustee or the Holders of at least 25% in aggregate principal amount of the Bonds then Outstanding; or

(c) the Republic shall fail to pay (i) any Public External Indebtedness of the Republic (other than Public External Indebtedness constituting guaranties by the Republic) with an aggregate principal amount in excess of U.S. $20,000,000 (or its equivalent in other currencies) as and when such Public External Indebtedness becomes due and payable (beyond any applicable grace period or waiver), or (ii) any Public External Indebtedness constituting guaranties by the Republic with an aggregate principal amount in excess of U.S. $20,000,000 (or its equivalent in other currencies) as and when such Public External Indebtedness becomes due and payable and such failure continues until the earlier of (A) the expiration of the applicable grace period or 30 days after written notice, whichever is longer, or (B) the acceleration of any such Public External Indebtedness by any holder thereof and such acceleration shall not have been rescinded or annulled; or

(d) (i) the validity of this Bond shall be contested in a formal administrative, legislative or judicial proceeding by the Republic or any legislative, executive, or judicial body or official of the Republic which is authorized in each case by law to do so and, acting alone or together with another such body or official, has the legal power and authority to declare this Bond invalid or unenforceable or (ii) the Republic shall declare a general suspension of payments or a moratorium on the payment of principal or interest on Public External Indebtedness (which does not expressly exclude the Bonds); or

 

11

(e) the Republic shall cease to be a member of the International Monetary Fund or cease to be eligible to use the general resources of the International Monetary Fund;

then in each and every such case, the Trustee or the Holders (the “Demanding Holders”) (acting individually or together) of not less than 25% of the aggregate Outstanding principal amount of the Bonds, upon notice in writing to the Republic, with a copy to the Trustee, of any such Event of Default and its continuance, may declare the principal amount of all the Bonds due and payable immediately, and the same shall become and shall be due and payable upon the date that such written notice is received by or on behalf of the Republic, unless prior to such date all Events of Default in respect of all the Bonds shall have been cured; provided that if, at any time after the principal of the Bonds shall have been so declared due and payable, and before the sale of any property pursuant to any judgment or decree for the payment of monies due which shall have been obtained or entered in connection with the Bonds, the Republic shall pay or shall deposit (or cause to be paid or deposited) with the Trustee a sum sufficient to pay all matured installments of interest and principal (and premium, if any) upon all the Bonds which shall have become due otherwise than solely by acceleration (with interest on overdue installments of interest, to the extent permitted by law, and on such principal (and premium, if any) of each Bond at the rate of interest specified herein, to the date of such payment of interest or principal (and premium, if any)) and such amount as shall be sufficient to cover reasonable compensation to the Demanding Holders, the Trustee and each predecessor Trustee, their respective agents, attorneys and counsel, and all other documented expenses and liabilities reasonably incurred, and all advances made for documented expenses and legal fees, reasonably incurred by the Demanding Holders, the Trustee and each predecessor Trustee, and if any and all Events of Default hereunder, other than the nonpayment of the principal of the Bonds which shall have become due solely by acceleration, shall have been cured, waived or otherwise remedied as provided herein, then, and in every such case, the Holders of more than 50% in aggregate principal amount of the Bonds then Outstanding, by written notice to the Republic and to the Trustee, may, on behalf of all of the Holders, waive all defaults and rescind and annul such declaration and its consequences, but no such waiver or rescission and annulment shall extend to or shall affect any subsequent default, or shall impair any right consequent thereon. Actions by Holders pursuant to this paragraph 6 need not be taken at a meeting pursuant to paragraph 7 hereof. Actions by the Trustee and the Holders pursuant to this paragraph 6 are subject to Article Four of the Indenture.

7. Holders’ Meetings and Written Action. The Indenture sets forth the provisions for the convening of meetings of Holders of Bonds and actions taken by written consent of the Holders of Bonds.

8. Replacement, Exchange and Transfer of the Bonds. (a) Upon the terms and subject to the conditions set forth in the Indenture, in case any Bond shall become mutilated, defaced or be apparently destroyed, lost or stolen, the Republic in its discretion may execute, and upon the request of the Republic, the Trustee shall authenticate and deliver, a new Bond bearing a number not contemporaneously Outstanding, in exchange and substitution for the mutilated or defaced Bond, or in lieu of and in substitution for the apparently destroyed, lost or stolen Bond. In every case, the applicant for a substitute Bond shall furnish to the Republic and to the Trustee such security or indemnity as may be required by each of them to indemnify, defend and to save each of them and any agent of the Republic or the Trustee harmless and, in every case of

 

12

destruction, loss or theft, evidence to their satisfaction of the apparent destruction, loss or theft of such Bond and of the ownership thereof. Upon the issuance of any substitute Bond, the Holder of such Bond, if so requested by the Republic, shall pay a sum sufficient to cover any stamp duty, tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected with the preparation and issuance of the substitute Bond.

(b) Upon the terms and subject to the conditions set forth in the Indenture, and subject to paragraph 8(e) hereof, a Certificated Security or Securities may be exchanged for an equal aggregate principal amount of Certificated Securities in different authorized denominations and a beneficial interest in the Global Security may be exchanged for an equal aggregate principal amount of Certificated Securities in different authorized denominations or for an equal aggregate principal amount of beneficial interests in another Global Security in different authorized denominations by the Holder or Holders surrendering the Security or Securities for exchange at the Corporate Trust Office, together with a written request for the exchange. Certificated Securities will only be issued in exchange for interests in a Global Security pursuant to Section 2.5(e) of the Indenture. The exchange of the Bonds will be made by the Trustee.

(c) Upon the terms and subject to the conditions set forth in the Indenture, and subject to paragraph 8(e) hereof, a Certificated Security may be transferred in whole or in part (in an amount equal to the authorized denomination or any integral multiple thereof) by the Holder or Holders surrendering the Certificated Security for transfer at the Corporate Trust Office accompanied by an executed instrument of transfer substantially as set forth in Exhibit F to the Indenture. The registration of transfer of the Bonds will be made by the Trustee.

(d) The costs and expenses of effecting any exchange, transfer or registration of transfer pursuant to this paragraph 8 will be borne by the Republic, except for the expenses of delivery (if any) not made by regular mail and the payment of a sum sufficient to cover any stamp duty, tax or other governmental charge or insurance charge that may be imposed in relation thereto, which will be borne by the Holder of the Bond. Registration of the transfer of a Bond by the Trustee shall be deemed to be the acknowledgment of such transfer on behalf of the Republic.

(e) The Trustee may decline to accept any request for an exchange or registration of transfer of any Bond during the period of 15 days preceding the due date for any payment of principal of, or premium, if any, or interest on, the Bonds.

9. Trustee. For a description of the duties and the immunities and rights of the Trustee under the Indenture, reference is made to the Indenture, and the obligations of the Trustee to the Holder hereof are subject to such immunities and rights.

10. Paying Agents; Transfer Agents; Registrar. The Republic has initially appointed the paying agents, transfer agents and registrar listed at the foot of this Bond. The Republic may at any time appoint additional or other paying agents, transfer agents and registrars and terminate the appointment of those or any paying agents, transfer agents and registrar, provided that while the Bonds are Outstanding the Republic will maintain in The City of New York (i) a paying agent, (ii) an office or agency where the Bonds may be presented for exchange, transfer and

 

13

registration of transfer as provided in the Indenture and (iii) a registrar; provided that the registrar shall not be in the United Kingdom. In addition, if and for so long as the Bonds are listed on the Luxembourg Stock Exchange and the rules of such Exchange so require, the Republic will maintain a paying agent in Luxembourg. Notice of any such termination or appointment and of any change in the office through which any paying agent, transfer agent or registrar will act will be promptly given in the manner described in paragraph 12 hereof.

11. Enforcement. Except as provided in Section 4.7 of the Indenture, no Holder of any Bonds of any Series shall have any right by virtue of or by availing itself of any provision of the Indenture or of the Bonds of such Series to institute any suit, action or proceeding in equity or at law upon or under or with respect to the Indenture or of the Bonds, or for any other remedy hereunder or under the Bonds, unless (a) such Holder previously shall have given to the Trustee written notice of default and of the continuance thereof with respect to such Series of Bonds, (b) the Holders of not less than 25% in aggregate principal amount Outstanding of Bonds of such Series shall have made specific written request to the Trustee to institute such action, suit or proceeding in its own name as Trustee hereunder and shall have provided to the Trustee such reasonable indemnity or other security as it may require against the costs, expenses and liabilities to be incurred therein or thereby and (c) the Trustee for 60 days after its receipt of such notice, request and provision of indemnity or other security, shall have failed to institute any such action, suit or proceeding and no direction inconsistent with such written request shall have been given to the Trustee pursuant to Section 4.9 of the Indenture, it being understood and intended, and being expressly covenanted by every Holder of Bonds of a Series with every other Holder of Bonds of such Series and the Trustee, that no one or more Holders shall have any right in any manner whatever by virtue or by availing itself of any provision of the Indenture or of the Bonds to affect, disturb or prejudice the rights of any other Holder of Bonds of such Series or to obtain priority over or preference to any other such Holder, or to enforce any right under the Indenture or under the Bonds of such Series, except in the manner herein provided and for the equal, ratable and common benefit of all Holders of Bonds of such Series. For the protection and enforcement of this paragraph, each and every Holder and the Trustee shall be entitled to such relief as can be given either at law or in equity.

12. Notices. The Republic will mail any notices to the Holders of the Bonds at their registered addresses as reflected in the books and records of the Trustee. The Republic will consider any mailed notice to have been given at the time it is mailed. In addition, if and so long as the Bonds are listed on the Luxembourg Stock Exchange and the rules of such Exchange shall so require, notices to Holders of the Bonds will be published in a leading newspaper with general circulation in Luxembourg, by publication on the website of the Luxembourg Stock Exchange at http://www.bourse.lu or, if publication as aforesaid is not practicable, in an English language newspaper with general circulation in the respective market regions or in another manner consistent with the rules of the Luxembourg Stock Exchange. The Republic will consider any published notice to be given on the date of its first publication.

13. Further Issues of Bonds. The Republic may from time to time, without the consent of Holders of the Bonds, create and issue additional Bonds having the same Terms as the Bonds in all respects, except for the issue date, issue price and first interest payment on the Bonds; provided, however, that any additional debt securities subsequently issued that shall be fungible with the previously Outstanding Bonds for U.S. federal income tax purposes. Additional Bonds issued in this manner will be consolidated with and will form a single Series with the previously Outstanding Bonds.

 

14

14. Prescription. To the extent permitted by law, claims against the Republic for the payment of principal of, or interest or other amounts due on, the Bonds (including Additional Amounts) will become void unless made within five years of the date on which that payment first became due (or such shorter period as may be prescribed by applicable law).

15. Authentication. This Bond shall not become valid or obligatory until the certificate of authentication hereon shall have been duly signed by the Trustee or its agent.

16. Governing Law. (a) THIS BOND WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK; PROVIDED, THAT ALL MATTERS GOVERNING AUTHORIZATION AND EXECUTION BY THE REPUBLIC SHALL BE GOVERNED BY THE LAWS OF COLOMBIA.

(b) The Republic hereby irrevocably submits to the exclusive jurisdiction of any state or federal court sitting in the Borough of Manhattan, The City of New York, and the courts of Colombia sitting in Bogotá D.C., Colombia in respect of any action arising out of or based on the Indenture or the Bonds that may be brought in any such court, irrevocably waives any objection which it may have to the venue of any such court in respect of any such action and, to the fullest extent permitted by law, irrevocably waives and agrees not to plead any immunity from the jurisdiction of any such court to which it might otherwise be entitled (including sovereign immunity and immunity from prejudgment attachment, post-judgment attachment and execution) in any such action based upon the Indenture or the Bonds, subject to the terms, conditions, limitations or exceptions under (i) Articles 192, 195, 298 and 299 of Law 1437 of 2011 (Código de Procedimiento Administrativo y de lo Contencioso Administrativo) as amended by Articles 80, 81 and 87 of Law 2080 of 2021 and (ii) Articles 593, 594 and 595 et al of Law 1564 of 2012 (Código General del Proceso) and Article 19 of Decree 111 of January 15, 1996, pursuant to which the revenues, assets and property of the Republic located in the Republic are not subject to execution, set-off or attachment. The Republic hereby appoints the Consul General of the Republic in The City of New York and her successors from time to time, at her office located at 10 East 46th Street, New York, New York 10017, as its authorized agent (the “Authorized Agent”) upon whom process may be served in any such action based on the Indenture or the Bonds which may be instituted in any state or federal court in the Borough of Manhattan, The City of New York. Such appointment shall be irrevocable until all amounts in respect of the principal of (and premium, if any) and any interest due and to become due on or in respect of all the Bonds have been paid to the Trustee and the Indenture shall have been discharged in accordance with its terms, except that, if, for any reason, the Consul General of the Republic ceases to be able to act as such Authorized Agent or no longer has an address in The City of New York, the Republic will appoint another person in the Borough of Manhattan, The City of New York, selected in its discretion, as its Authorized Agent and provide notice in writing thereof to the Trustee. The Republic will take any and all action, including the filing of any and all documents and instruments, that may be necessary to continue such appointment or appointments in full force and effect as aforesaid. Upon receipt of such service of process, the Authorized Agent shall advise the Republic promptly at its address specified in Section 9.4 of the Indenture. Service of process upon the Authorized Agent at the address indicated above, or at such other address in the Borough of Manhattan, The City of New York as the Authorized Agent shall specify by notice given by it to the Trustee, shall be deemed, in every respect, effective service of process upon the Republic.

 

15

(c) Nothing in this paragraph 16 shall affect the right of the Trustee or (in connection with legal actions or proceedings by any Holder as permitted by the Indenture and this Bond) any such Holder to serve legal process in any other manner permitted by law.

(d) Notwithstanding anything else in this paragraph 16 to the contrary, the Republic reserves the right to plead sovereign immunity with respect to actions brought under the United States securities laws or any state securities laws and the Republic’s appointment of the Consul General of the Republic in The City of New York will not extend to such actions.

17. Warranty of the Republic. Subject to paragraph 15, Republic hereby certifies and warrants that all acts, conditions and things required to be done and performed and to have happened precedent to the creation and issuance of this Bond and to constitute the same legal, valid and binding obligations of Republic enforceable in accordance with their terms, have been done and performed and have happened in due and strict compliance with all applicable laws.

18. Definitive Headings. The descriptive headings appearing in these Terms are for convenience of reference only and shall not alter, limit or define the provisions hereof.

19. Modifications. (a) Any Modification to the Bonds or the Indenture insofar as it affects the Bonds shall be made in accordance with Article Ten and Article Eleven of the Indenture.

(b) Any Modification pursuant to this paragraph 19 will be conclusive and binding on all Holders of the Bonds, and on all future Holders of the Bonds whether or not notation of such Modification is made upon the Bonds. Any instrument given by or on behalf of any Holder of a Bond in connection with any consent to or approval of any such Modification will be conclusive and binding on all subsequent Holders of that Bond.

20. Provision in National Budget. The Republic recognizes that amounts due under the Bonds must be paid out of appropriations provided in the national budget, and has undertaken that it will annually take all necessary and appropriate action to provide for the due inclusion therein and for the timely payment of all amounts due thereunder as such amounts become due in the ordinary course, and will take all such other action as may be necessary or appropriate at any other time to make timely payment of such amounts as may be due or payable in the event of acceleration or prepayment of the Bonds.

21. Contracts with the Republic. In accordance with the legal requirements of the Republic relating to contracts with the Republic, the Holders of the Bonds shall be deemed to have waived by purchasing the Bonds any right to petition for diplomatic claims to be asserted by its government against the Republic, except in the case of denial of justice, with respect to the rights of such Holder under the Indenture and this Bond.

22. Repurchase. The Republic may at any time purchase Bonds at any price in the open market, in privately negotiated transactions or otherwise. Bonds so purchased by the

 

16

Republic may, at the Republic’s discretion, be held, resold or surrendered to the Trustee for cancellation.

 

17

TRUSTEE, REGISTRAR, PAYING AND TRANSFER AGENT

The Bank of New York Mellon

Global Trust Services—Americas

240 Greenwich Street, Floor 7E

New York, New York 10286

 

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Exhibit 3

February 2, 2023

Bogotá D.C.

Republic of Colombia

Ministry of Finance and Public Credit

Carrera 8, No. 6C-38, Piso 1

Bogotá D.C., Colombia

Ladies and Gentlemen:

In my capacity as Head of the Legal Affairs Group of the General Directorate of Public Credit and National Treasury of the Ministry of Finance and Public Credit of the Republic of Colombia (the “Republic”), and in connection with the Republic’s offering, pursuant to its registration statement under Schedule B of the United States Securities Act of 1933, as amended (the “Securities Act”), filed by the Republic with the United States Securities and Exchange Commission (the “Commission”) under Registration No. 333-253587, (the “Registration Statement”), of U.S.$2,200,000,000 aggregate principal amount of its 7.500% Global Bonds due 2034 (the “Securities”), I have reviewed the following documents:

(i) the Registration Statement and the related Prospectus dated April 15, 2021 included in the Registration Statement most recently filed with the Commission, as supplemented by the Prospectus Supplement dated January 24, 2023 relating to the Securities, as filed with the Commission pursuant to Rule 424(b)(5) under the Securities Act;

(ii) an executed copy of the Indenture, dated January 28, 2015, between the Republic and The Bank of New York Mellon, as amended and supplemented by the Supplemental Indenture thereto, dated as of September 8, 2015, and as further amended and supplemented from time to time (as amended and supplemented, the “Indenture”);

(iii) the global Securities dated February 2, 2023, in the aggregate principal amount of $2,200,000,000 executed by the Republic;

(iv) an executed copy of the Authorization Certificate dated February 2, 2023, pursuant to which the terms of the Securities were established;

 

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(v) all relevant provisions of the Constitution of the Republic and the following acts, laws and decrees of the Republic, under which the issuance of the Securities has been authorized:

 

(a)

The relevant portions of Law 80 of October 28, 1993 (a translation of which has been filed as part of Exhibit F to the Republic’s Registration Statement No. 333-13172 and incorporated herein by reference);

 

(b)

Article 16 of Law 185 of January 27, 1995 (a translation of which has been filed as part of Exhibit F to the Republic’s Registration Statement No. 333-13172 and incorporated herein by reference);

 

(c)

Article 13 of Law 533 of November 11, 1999 (a translation of which has been filed as part of Exhibit F to the Republic’s Registration Statement No. 333-13172 and incorporated herein by reference);

 

(d)

Law 781 of December 20, 2002 (a translation of which has been filed as part of Exhibit F to the Republic’s Registration Statement No. 333-109215 and incorporated herein by reference);

 

(e)

Law 1366 of December 21, 2009 (a translation of which has been filed as part of Exhibit 3 to Amendment No. 2 to the Republic’s Annual Report on Form 18-K for the fiscal year ended December 31, 2008 and incorporated herein by reference);

 

(f)

Law 1624 of April 29, 2013 (a translation of which has been filed as part of Exhibit 3 to Amendment No. 1 to the Republic’s Annual Report on Form 18-K for the fiscal year ended December 31, 2012 and incorporated herein by reference);

 

(g)

Decree No 1068 of May 26, 2015 (a summary of the material portion of which has been filed as part of Exhibit 3 of Amendment No. 1 to the Republic’s Annual Report on Form 18-K for the fiscal year ended December 31, 2014 and incorporated herein by reference);

 

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(h)

Law 1771 of December 30, 2015, (a translation of which has been filed as Exhibit A to Exhibit 3 to Amendment No. 2 to the Republic’s Annual Report From 18-K for the fiscal year ended December 31, 2014); and

 

(i)

Law 2073 of December 31, 2020 (a translation of which has been filed as part of Exhibit 4 to Amendment No. 1 to the Republic’s Report on Form 18-K for the fiscal year ended December 31, 2019 and incorporated herein by reference).

(vi) the following additional actions under which the issuance of the Securities has been authorized:

 

(a)

CONPES Document No. 4108 DNP, MINHACIENDA, dated November 22, 2022 (a translation of which is attached as Exhibit A hereto);

 

(b)

Authorization by Act of the Interparliamentary Commission of Public Credit (Comisión Interparlamentaria de Crédito Público) adopted in its meetings held on December 14, 2022 (a translation of which is attached as Exhibit B hereto); and

 

(c)

Resolution No. 0192 of January 24, 2023 of the Ministry of Finance and Public Credit (a translation of which is attached as Exhibit C hereto).

It is my opinion that under and with respect to the present laws of the Republic, the Securities have been duly authorized, executed and delivered by the Republic and, assuming due authentication thereof pursuant to the Indenture, constitute valid and legally binding obligations of the Republic.

I hereby consent to the filing of this opinion as an exhibit to the Republic’s Amendment No. 2 to its Annual Report on Form 18-K for its fiscal year ended December 31, 2021 and to the use of the name of the Head of the Legal Affairs Group of the General Directorate of Public Credit and National Treasury of the Ministry of Finance and Public Credit of the Republic under the caption “Validity of the Securities” in the Prospectuses and under the heading “General Information—Validity of the Bonds” in the Prospectus Supplements referred to above. In giving the foregoing consent, I do not thereby admit that I am in the category of persons whose consent is required under Section 7 of the Act or the rules and regulations of the Commission thereunder.

 

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No opinion is expressed as to any law of any jurisdiction other than Colombia. With respect to the opinion set forth above, my opinion is limited to the laws of Colombia. In particular, to the extent that New York State or United States Federal law is relevant to the opinions expressed above, I have relied, without making any independent investigation, on the opinion of Arnold & Porter Kaye Scholer LLP, filed as an exhibit to Amendment No. 2 to the Republic’s Annual Report on Form 18-K for its fiscal year ended December 31, 2021. This opinion is specific as to the transactions and the documents referred to herein and is based upon the law as of the date hereof. My opinion is limited to that expressly set forth herein, and I express no opinions by implication.

 

 

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Exhibit A

 

DOCUMENT   CONPES   National Council of Social and Political Economy Republic of Colombia National Planning Department

Favorable Opinion to the Nation for the execution of transactions related to External Public Credit to the refinancing and/or financing budget appropriations of the 2023 and 2024 terms up to U.S. $5,500 million, or its equivalent amount in other currencies

Department of National Planning

Ministry of Finance and Public Credit

Approved version

NATIONAL COUNCIL OF SOCIAL AND POLITICAL ECONOMY

Bogotá, D.C., November 22, 2022

Gustavo Francisco Petro Urrego

President of the Republic

Francia Elena Márquez Mina

Vice President of the Republic

 

Hernando Alfonso Prada Gil		Álvaro Leyva Duran
Minister of Interior		Minister of Foreign Relations
José Antonio Ocampo Gaviria		Néstor Iván Osuna Patiño
Minister of Finance and Public Credit		Minister of Justice and Law
Iván Velásquez Gómez		Cecilia Matilde López Montaño
Minister of National Defense		Minister of Farming and Rural Development
Diana Carolina Corcho Mejía		Gloria Inés Ramírez Ríos
Minister of Health and Social Protection		Minister of Labor
Irene Vélez Torres		Darío Germán Umaña Mendoza
Minister of Mines and Energy		Minister of Commerce, Industry and Tourism
Alejandro Gaviria Uribe		Maria Susana Muhamad González
Minister of National Education		Minister of Environment and Sustainable Development
Marta Catalina Velasco Campuzano		Sandra Milena Urrutia Pérez
Minister of Housing, Cities and Territory		Minister of Information Technologies and communications
Guillermo Francisco Reyes Gonzáles		Patricia Elia Ariza Flórez
Minister of Transportation		Minister of Culture
Maria Isabel Urrutia Ocoró		Arturo Luis Luna Tapia
Minister of Sports		Minister of Science, Technology and Innovation

Jorge Iván González Borrero

General Director of the National Planning Department

 

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Juan Miguel Gallego Acevedo Subdirector General of Prospective and National Development		Tania Guzmán Pardo Subdirector of the Royalties General System
José Alejando Herrera Lozano Subdirector General of Investments, Tracking and Evaluation		Camilo Acero Azuero Subdirector General of Decentralization and Regional Development

 

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Executive Summary

Pursuant the set forth in paragraph 2 of article 41, Law 80 of 1993¹ and the Book 2, Part 2 of Decree 1068 of 2015² amended by Decree 1575 of 2022³, through the present document, it is submitted for the consideration of the National Council of Social and Economic Policy (CONPES), the favorable opinion for the nation to contract transactions related to external public credit for the re-financing and/or financing of budget appropriations for the terms 2023 and 2024 up to the amount of U.S. $ 5,500 million, or its equivalent in other currencies.

The above mentioned is aimed to grant flexibility and room for maneuver for (i) the pre-financing and/or financing of the necessities of the terms 2023 and 2024; (ii) to obtain timely access to international capital markets; (iii) to obtain funding in favorable terms and conditions; (iv) to diversify the investor base; (v) to achieve the strategic objective of the building of liquid and efficient curves.

Having this flexibility is important for the nation to have the necessary resources to finance budget appropriations and comply with interests and amortizations payments for 2023 and 2024, in a changing international context with potential risks.

 

1	Through which the General Statute for Public Administration Purchases was enacted.

2	Through which the Single Regulatory Decree for Finance and Public Credit Sector was enacted and that revoked Decrees 1497 of 2002 and 3160 of 2011.

3	Through which Title 1 of Part 2 of Book 2 of Decree 1068 of 2015 - “Single Regulatory Decree of the Finance and Public Credit Sector” was amended with respect to public credit operations, assimilated operations, liability management and related operations.

Classification: H63.

Key words: external bonds, financing, Nation, international, issuance, sovereign debt, debt service.

Table of Contents

 

1.		INTRODUCTION			4
2.		BACKGROUND			5
2.1.		Document CONPES 4022			5
2.1.1.		Issuance of Global Bond 2032 and Global Bond 2042			6
2.1.2.		Global Bond 2049 Reopening			6
2.2.		Document CONPES 4043			6
3.		JUSTIFICATION: FUNDING NEEDS			7
4.		MARKET CONTEXT			9
4.1.		Global Macroeconomic Performance			9
4.2.		United States of America			12
4.2.1.		Monetary Policy and Interest Rates			13
4.2.2.		Tax Policy			15
4.3.		Euro Zone			15
4.3.1.		Monetary Policy and Interest Rates			15
4.3.2.		Tax Policy			17
4.4.		Japan			18
4.4.1.		Monetary Policy and Interest Rates			18
4.4.2.		Tax Policy			19
4.5.		Colombia			20
4.5.1.		Macroeconomic Evolution			20
4.5.2.		Monetary Policy			21
4.5.3.		Tax Policy			22
4.5.4.		Risk Perception			23
4.5.5.		Credit Rating			24
4.5.6.		Financing Levels			25
4.5.7.		Issuance Strategy			26
4.5.8.		Thematic Bonds			29
4.5.9.		Other sources of financing			30
5.		Objectives			31
6.		Recommendations			31
Bibliography					32

Graphic Index

Graphic 1. Amortization Profiles Term 2024

Graphic 2. Changes in Global Growth expectations of the IMF

Graphic 3. US Treasury Bonds and FED Interest Rate

Graphic 4. Reference 10 years bonds LATAM in USD Yield

Graphic 5. 10 year US Treasury securities forecast

Graphic 6. 30 year US Treasury securities

Graphic 7. Euribor 6M and Germany’s 10 year reference bond behavior

Graphic 8. Interest Rate - Monetary Policy

Graphic 9. Inflation

Graphic 10. Colombia’s Cash Flow - Global Bonds

Graphic 11. EMBI+

Graphic 12. Colombia’s Cash Flow - Global bonds

Graphic 13. Reference bonds in U.S. dollars and differential over 10 year Treasury.

Graphic 14. Refence bonds in U.S. dollars and differential over 30 year Treasury.

Graphic 15. Global Bond - Euro 2026

Graphic 16. 10 years Yen vs. Swap (LIBOR 6M) reference

Table Index

Table 1. Uses and Sources of the National Government 2023

Table 2. Colombia Sovereign Ratings

Table 3. Green TES Auctions

Acronyms and abbreviations

 

ECB		European Central Bank
CONPES		National Council of Social and Economic Policy
COVID-19		Coronavirus 2019 disease
DANE		National Statistic Administrative Department
EMBI+		Emerging markets bond index
EURIBOR		Euro Interbank Offered Rate

 

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GNC		National Central Government
FED		Federal Reserve
IMF		International Monetary Fund
FOMC		Federal Open Market Committee
IRC		Investor Relations Colombia
Pbs		Basic Points
PEPP		Pandemic Emergency Purchase Program
GDP		Gross Domestic Product
UE		European Union

 

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1. INTRODUCTION

The present document submits for the consideration of the National Council of Social and Economic Policy (CONPES), the favorable opinion for the nation to contract transactions related to external public credit for the prefinancing and/or financing of budget appropriations for the terms 2021 and 2022 up to the amount of U.S. $ 5,500 million, or its equivalent in other currencies. The aforementioned is pursuant paragraph 2, article 41, Law 80 of 1993⁴ and Book 2, Part 2 of Decree 1068 of 2015⁵ amended by Decree 1575 of 2022.

 

4	Through which the General Statute for Public Administration Purchases was enacted. Paragraph 2 of article 41 sets forth:

Public Credit Transactions. Notwithstanding the provisions of special laws, for the purposes of this law, it will be considered as “public credit transactions” to those whose purpose is to provide to an entity with resources with a term for its payment, among which are the contracting of loans, the issuance, subscription and placement of bonds and securities, supplier credits and the granting of guarantees for credit obligations in charge of governmental entities.

(...) For the management and execution of all external credit transactions and transactions similar to these of Governmental entities and for internal public credit transactions and transactions assimilated to these by part of the Nation and its decentralized entities, as well as for the granting of the guarantee of Nation, the authorization of the Ministry of Finance and Public Credit will be required, with prior favorable concepts from CONPES and the National Planning Department.

(...) In any case, the external public credit transactions of the Nation and those guaranteed by it, with term of more than one year, required a prior favorable concept from the Inter-Parliamentary Commission of Public Credit.

(...) The transactions referred to in this article and that are held to be executed abroad are submitted to the jurisdiction agreed in the contracts”.

5	Through which the Single Regulatory Decree for Finance and Public Credit Sector was enacted and that revoked Decrees 1497 of 2002 and 3160 of 2011. Article 2.2.1.3.1. sets forth:

Public debt Securities. Public debt securities include bonds and other debt securities and with a term for its redemption, issued by governmental entities. Public debt securities do not include securities issued by credit institutions, insurance companies and other financial entities of public nature character, in the ordinary course of its business. The placement of public debt securities will be subject to the general financial terms and conditions set forth by the Board of Directors of Banco de la República. Article 2.2.1.3.2. establishes:

National Public Debt Securities. The issuance and placement of public debt securities in the name of the Nation will require authorization, issued by resolution of the Ministry of Finance and Public Credit, which may be granted once the following have been previously obtained: a) Favorable opinion of the National Council of Social and Economic Policy, CONPES; and, b) Concept of the Public Credit Commission in the case of external public debt securities with a term of more than one year.Article 2.2.1 .6. sets forth:Issuance of authorizations and concepts. To issue the corresponding concepts and authorizations, the CONPES, the National Planning Department and the Ministry of Finance and Public Credit will take into account, among others, the adequacy of the respective transactions to the Government’s policy in matters of public credit and its conformity with the Macroeconomic Program and Financial Plan approved by the CONPES, and the Superior Council of Tax Policy, CONFIS. The concepts of CONPES and the National Planning Department Board, when there is room for them, will be issued over the technical, economic and social justification of the project, the execution capacity and the financial situation of the respective entity, its financing plan by sources of resources and its schedule of annual expenses.

 

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In this way, having the required authorizations to access to different sources of funding, the Nation will be entitled to: (i) prefinance and/or finance the necessities of the terms 2023 and 2024; (ii) to obtain timely access to international capital markets; (iii) to diversify the investor base; (iv) to achieve the strategic objective of building liquid and efficient curves.

The present document is divided in six principal sections, including this introduction. The second section presents the background, specifically related to issuances made by the Nation. The third section justify the need of prefinancing and/or financing for the 2023 and 2024 terms. Fourth section presents the market context, particularly the behavior of the U.S., Eurozone, Japanese economies as well as the performance of Colombian economy. Fifth section presents the objectives to be achieved with the document and Sixth section presents recommendations to the CONPES.

2. Background

2.1. Document CONPES 4022

Through Document CONPES 4022 approved on February 3, 2021, the Nation received a favorable opinion to contract operations related with external public credit to prefinance and/or finance budget appropriations for the terms 2021 and 2022 up to the amount of USD 4000 million or its equivalent in other currencies.

Charged to this amount, the Nation executed two operations in the international capital markets to finance budget requirements for the 2021 term for a total amount of USD 4000 million as detailed in Sections 2.1.1 and 2.1.2, using entirely the authorized amount.

 

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2.1.1. Issuance of Global Bond 2032 and Global Bond 2042

On April, 19, 2021, the Nation issued a Global Bond due on April 2032 for an amount of USD 2,000 million, at a rate of 3,356% and with a coupon of 3,250%. Additionally, it issued the Global Bond due on February 2042, for an amount of USD 1,000 million, at a rate of 4,235% and with a coupon of 4,125%. This financial operation, for a total amount of USD 3,000 million, is the biggest executed by the Nation through Global Bonds. Similarly, the issuance of the Bond due on 2042 represented the issuance of the first 20 years term Global Bond, strengthening the building of the USD Yield Curve and improving the maturity profile of the external public debt.

2.1.2. Global Bond 2049 Reopening

On October 14, 2021, the Nation executed an operation in the international capital market consisting of the reopening of the Global Bond due 2049 for an amount of USD 1,000 million, of which USD 600 million were destined to finance budget requirements for the 2021 term and USD 400 million for the prefinancing of the fiscal term 2022. The reopening of the Global Bond due 2049 had a yield of 5,125%, 10pbs below the rate of 5,22% with which the bond was initially issued. Once finished this operation, there were not available remanent of the resources approved by Document CONPES 4022.

2.2. Document CONPES 4043

Through Document CONPEs 4043, approved on August 9, 2021, the Nation received favorable opinion to contract operations related with external public credit to prefinance and/or finance budget appropriations for the terms 2021 and 2022 up to the amount of USD 5,500 million or its equivalent in other currencies. No operations, charge to this amount, have been executed in the international markets.

 

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3. Justification: Funding Needs

The Nation has maintained a proactive management in order to ensure the necessary resources to meet the external debt service. During the last years, liability management operations have been executed and efforts have been made to look for proper market windows, avoiding to access to international capital markets in contexts of high volatility, as the experienced at the end of 2021 and the elapsed of 2022.

To keep a proactive management for the obtaining of financing resources is more relevant in the current market context. This due to (i) the change in the monetary policy of developed economies due to inflation, principally in the USA, that affects financing rates for emerging economies; (ii) a possible energetic crisis in Europe as winter approaches due to the war between Russia and Ukraine; (iii) the reduction in world economic growth expectations or a possible recession for 2023; (iv) the risk perception towards emerging markets; and, (iv) new outbreaks of COVID-19 and prolonged confinement in China.

It is also worth of mention that in the term 2024 maturities equivalent to the 6,8% of the total external debt of the National Central Government (GNC) are present. This, together with the current context, make even more relevant to have the proper authorizations in a timely way.

Below, Table 1 presents sources and uses of term 2023:

 

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Table 1. Sources and uses of Central National Government 2023

(Projected figures in millions of USD and billions of pesos)

 

 

Sources		USD				Colombian Pesos 99.012				Uses		USD				Colombian Pesos 99.012
Disbursement							62.789			Deficit to finance							59.248
External			4.500				19.860			Of which
Internal							43.929			Internal interest							48.481
										External interest			3.150				14.394
Other resources							22.075			Amortizations							30.430
										External			2.553				11.665
										Internal							18.765
										Payment of obligations (judgement, health, others)							250
Initial availability							14.149			Final availability							9.084

Source: DNP (2022) September update of the Medium Term Fiscal Framework

By 2023, total external debt amortizations amount to approximately to USD 2,553 million, which are distributed throughout the year with the amortization of multilateral loans and bonds issued in the international capital market, while external interests are projected in approximately USD 3,150 million, concentrated in the first seven months of the year, for a total external debt service for 2023 of USD 5,703 million.

Considering the above, and the projected deficit for the year 2023 that amounts to 59.248 billion pesos (4% of GDP), the annual external financing needs are projected at USD 4,500 million, as shown in Table 1, referred to uses and sources for the GNC in 2023, which will be reviewed and updated at the end of 2022.

On the other hand, for the year 2024, external debt service exceeds USD 9,000 million, USD 6,296 million from amortizations and USD 2,912 million from interests, being the year with the highest concentration of external debt maturities of the debt profile of the GNC. Additionally, these concentrations are located principally in the first semester of the year, as showed in Graphic 1.

 

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Thus, considering the relevance of flexibility in the current international context for (i) the prefinancing and/or financing of the necessities of the terms 2023 and 2024; (ii) to have a timely access to international capital markets; (iii) to diversify the investor base; (iv) to achieve the strategic objective of the building of liquid and efficient curves.

4. Market Context

4.1. Global Macroeconomic Performance

The IMF growth report from October 2022 projected a growth of 3.2% for the world economy (similarly to the July projection), 2.4% for developed economies and 3.7% for emerging economies (Graphic 2). This is the weakest growth profile since 2001 and reflects important decelerations in the principal economies: a contraction of the GDP of the USA in the first semester of 2022, a contraction in the Euro Zone through the second semester of 2022, and COVID-19 outbreaks and prolonged confinements in China.

 

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Additionally, the report argues that the world contraction in the second trimester of the current year is principally due to: (i) highest inflation registered in the last decades; (ii) the hardening of financial conditions in the majority of the regions; and, (iii) the Russian invasion to Ukraine (IMF, 2022).

 

Since 2021, the consumer prices are increasing to a higher rate than the originally expected, reaching historically high levels. Additionally, it is expected that new shocks in energy and food prices will lengthen or increase the high inflation level through 2023. Due to these reasons, many central banks have implemented measures to harden their monetary policy. In general terms, nominal policy rates are above the levels previous to the pandemic, in both, emerging and developed countries.

In this context, higher interest rates and the increase associated to the financial cost, together with a reduction of fiscal support, are having the effect of not only decelerate the internal demand and the economies in general but also have widened the spreads of sovereign bonds for the economies of low and medium income, as is the case of Colombia (Graphic 3 and Graphic 4).

 

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On the other hand, the Russian invasion to Ukraine continues destabilizing the world economy, not only because it has created an energetic crisis in Europe that is drastically increasing the living cost and blocking the economic activity, but also because it has decelerated general production as result of the persistent interruptions in the chain of supply and a increase in the cost of supplies.

 

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As inflation, monetary and fiscal tightening and the war in Ukraine continues restricting the world activity, the pandemic is also affecting the macroeconomic perspective, particularly in China where a contraction in the second semester contributed to a slower world activity. Temporary closures in Shanghai and other places due to COVID-19 outbreaks have weakened domestic demand. (IMF, 2022).

Under this scenario, Colombia must have the capacity to finance itself, having the proper authorizations, anticipating a possible world recession and exploiting market windows that could appear in the international capital markets in the current international context.

4.2. United States

In the first half of 2022, inflation in the United States remained above the target of the Federal Open Market Committee (FOMC) of 2% and reached its highest levels in more than 40 years. This increase was driven by an accelerating retail food and energy prices, as well as a tight labor market in which demand has remained strong and supply has increased modestly.

The Consumer Price Index (CPI) for the month of June 2022 reached its highest point at 9.1%, a figure not seen since 1981. The most recent CPI data was located at 8.2% by September 2022. Increases in housing, food, and health care indexes were the largest contributors to the monthly increase. These increases were partially offset by a 4.9 percent decline in the gasoline index during the month of September (Bureau of Labor Statistics, 2022).

On the other hand, US Treasuries yields in 2022 hit more than a decade highs, as evidenced in Graphic 3. At the same time, the sharp inversion of the Treasuries yield curve, often viewed as a potential indicator of recession risk, showed its deepest inversion since the year 2000, carrying the yield of the two-year Treasury to be 50 bps above the yield of the 10-year Treasury in the month of August, as a consequence of the increase in interest types, and the expectation of subsequent increases. Currently, cut to November 2022, the curve remains inverted at -52.8 bps (Refinitiv, 2022).

 

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4.2.1. Monetary Policy and Interest Rates

As response to sustained inflationary pressures and a strong labor market, the FOMC has tightened its monetary policy since late 2021. As a consequence, it began reducing its monthly net asset purchases in November 2021 and accelerated those reductions in December, ending net purchases at the beginning of March 2022. In January 2022, the FOMC issued a set of principles regarding its planned approach to significantly reduce the size of the Fed’s balance sheet. In keeping with those principles, the Committee announced in May its specific plans to significantly reduce its security holdings; these reductions started from June 1, 2022 (FED, 2022).

Additionally, after maintaining the federal funds rate close to 0% since the start of the pandemic (March 15, 2020), in March 2022 the FOMC raised the target range for that rate from 0.25% to 0.50 %. In May, June and July the Committee raised the rate again bringing it to the range of 1.00% to 2.50%, and expressed its anticipation that continued increases in the target range would be appropriate. As a consequence, in September 2022, the FOMC increased the rate 75 bps to place it at 3.25%, and on November 2, 2022 it decided to increase it again 75 bps, reaching 4.00%, as evidenced in Graphic 3 (EDF, 2022).

On the other hand, it is important to mention that the results of the survey on the yield forecasts of the 10-year and 30-year treasury bond rates carried out by Bloomberg to analysts in October 2022, estimate levels in a range average and high of 3.3% and 5.1% respectively in the first quarter of 2023 for 10-year securities; and 3.4% and 5.2% for 30-year securities (Graphic 5 and Graphic 6).

 

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Under this scenario, Treasuries curve could continue presenting upward pressures, causing that the financial cost continues with its increasing, for all the agents, principally sovereign and corporate issuers from emerging economies, as has been evidenced through 2022.

 

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4.2.2. Tax Policy

Assuming that current US laws governing taxes and spending hold, the US Congressional Budget Office projects the federal budget deficit to shrink from $2,8 trillion in 2021 to $1,0 trillion in 2022 as pandemic response spending declines and revenues rise. The 2022 deficit is similar, in nominal terms, to that registered in 2019, before the start of the pandemic. Regarding the size of the economy, the 2022 deficit is projected to total 4.2% of GDP and about a third of the 12.4% deficit recorded last year. In the year 2023, a budget deficit of USD 984 billion is projected, which represents 3.8% of GDP.

According to the latest report from the Congressional Budget Office, Federal spending for 2022 is projected at USD 5,8 trillion, which represents 23.5% of GDP in 2022. For the 2023 term, Federal spending is estimated at USD 8.9 trillion, equivalent to 22.3% of GDP in 2023. On the other hand, tax revenues are estimated at USD 4,8 trillion for 2022 , which represents 19.6% of GDP in 2022. For the year 2023, revenues of USD 4,9 trillion are projected, which corresponds to 18.6% of the GDP of 2023.

On the other hand, rapid nominal GDP growth, reflecting both high inflation and continued real GDP growth, helps keep the US debt-to-GDP ratio low. As a result, it is estimated that by 2022 the debt will be close to USD 24 trillion, corresponding to 97.9% of GDP, which represents a reduction if compared to 99.6% registered in 2021. Between 2023 and 2024, the debt is expected to fall slightly to 96%, after which the debt is projected to increase as a percentage of GDP, reaching 110% by the end of 2032, which is the highest level of debt in US history, and is projected to be higher in the following two decades (Congressional Budget Office, 2022).

4.3. Euro Zone

4.3.1. Monetary policy and interest rates

Inflation in Europe reached levels of 9.9% in September (European Central Bank, 2022), largely due to the increase in high energy prices (21.9%). The foregoing is generating a reduction in the purchasing power of citizens and, although the bottlenecks are relaxing, they continue to limit economic activity. Besides, the adverse socio-political situation caused by the war between Russia and Ukraine is affecting the confidence of business and consumers.

 

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In this context, on October 27, 2022 the BCE decided to increase for third time in the same year, the three official types of interest⁶ in 75 pbs, looking to ensure the return of the inflation objective to 2% in the medium term. The interest type of principal financial operations and the interest types of the marginal credit facility and the deposit facility were increased up to 2,00%, 2, 25% and 1,50%, respectively, and further increases are expected in the following meetings to moderate the demand and protect from the risk of a persistent increase in the inflation perspectives.

As consequence, the yields of the sovereign debt of the Euro Zone registered an increase through the year, as evidence in the behavior of the Euro Interbank Offered Rate (Euribor) and the 10 years German bonds that passed from negative levels to levels close to 2,0% (Graphic 7).

 

 

6	The interest type of the principal financial operations, the interest types of the credit marginal facility and the deposit facility.

 

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On the other hand, the Council foresee to continue with the reinvesting of the total principal of the securities acquired through the Asset Purchase Program, that reach maturity during an extended period after the date in which the BCE official interest types started their increasing, and for all the time deemed necessary to keep condition of broad liquidity and a proper orientation of the monetary policy.

Regarding the Pandemic Emergency Purchase Program (PEPP) of the European Central Bank, the Governing Council plans to reinvest the principal of the acquired securities that reach maturity at least until the end of 2024. In any case , the future extinction of the PEPP portfolio will be managed in such a way as to avoid interference with the appropriate monetary policy stance (ECB, 2022).

The continuity of a contractive monetary policy by the ECB and high interest rates confirms the need for Colombia to be able to count on the necessary flexibility to finance the needs for the next periods of time, whether in dollars, euros or other currencies.

4.3.2. Fiscal policy

In the context of the Russian invasion to Ukraine, the European Union (EU) has approved an unprecedented economic sanctions package that will leave the region facing some immediate challenges, notably over refugee flows, security and possible countermeasures by Russia. Furthermore, this crisis is expected to negatively affect growth, including through repercussions in financial markets, new pressures on energy prices, persistent bottlenecks in the supply chain, and effects on confidence.

Uncertainty and exceptional risks call for strong coordination of economic and fiscal policies to ensure fiscal sustainability and, together with broader economic policies, help sustain the recovery and steer the European economy towards sustainable growth despite the deteriorating world environment.

 

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The so-called “general escape clause”⁷ of the Stability and Growth Pact will continue to apply in 2022. This will allow fiscal policy to adjust to the evolving situation in order to face the immediate challenges posed by this crisis. However, it is expected to be deactivated as of 2023, largely due to the increase in deficits (over 3%), which has brought debt levels above the reference value of 60% of GDP in many countries, which poses additional challenges in the transition back to existing rules (European Commission, 2022).

4.4. Japan

4.4.1. Monetary policy and interest rates

At the Bank of Japan (BoJ) meeting on September 22, 2022, the committee decided to keep its monetary policy rate at -0.10% and announced that it expects interest rates to remain at their current or lower levels in the short and long term. Regarding monetary policy stimuli, it decided to maintain qualitative and quantitative monetary easing until reaching the inflation target and the stabilization of financial markets. In this order of ideas, the BoJ will continue to support the financing of companies and promote the stability of the financial market through the provision of yen and funds in foreign currency through the purchase of Japanese Government Bonds (JGB) at 0.25%. each business day through purchase operations at a fixed rate and with no upper limit, so that the yields of the JGB to 10 years remain around 0%, while the purchase of commercial paper and of corporate bonds will gradually return to the pace prior to the COVID-19 pandemic.

As for the operations of the special financing support program in response to COVID-19, the BoJ committee decided to phase them out and will instead extend the implementation period of the provision of funds to six months for Japanese government unsecured loans. for small and medium-sized enterprises, and three months for government-guaranteed loans.

 

7	The specific terms of the UE’s fiscal laws allows a coordinated and orderly temporal deviation of the normal requirements for all the Estates members in a situation of generalized crisis provoked by a grave recession of the economic Euro zone or of all the UE.

 

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Additionally, in order to continue supporting the financing of this group of companies mainly, as of September 27, 2022, an upper limit will not be established in the amount of the provision of funds in the framework of the Funding Operations supported by Pooled Collateral, for which various types of collateral are accepted (Bank of Japan, 2022).

In the latest BoJ Economic Activity Outlook report, the Japanese economy is forecast to grow at 2.4% for 2022, that is, 0.5 percentage points less than the projections estimated in the previous report, as a result of the slowdown of the economy at the international level and the intensification of restrictions on the supply side. However, the bank raised the economic growth outlook for 2023 from 1.9% to 2.0% (Bank of Japan, 2022).

4.4.2. Tax Policy

On October 28, 2022, the Japanese Prime Minister announced a new $200 billion economic stimulus to mitigate the impact of rising raw material costs. It is expected that JPY 39 trillion (260,000 million dollars) will be allocated to fiscal spending, with the aim of boosting Japan’s GDP by 4.6%, which will be financed with an extra budget of 201,000 million dollars. The stimulus contemplates subsidies to reduce household electricity bills by 20% of

January to September 2023. Additionally, coupons will be issued for families with newborns and a subsidy will be extended to curb gasoline prices. With these measures, the Japanese government expects to reduce consumer prices in Japan by around 1.2 percentage points between January and September of next year (Reuters, 2022).

 

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4.5. Colombia

4.5.1. Macroeconomic evolution

Despite the deterioration in the international environment, economic activity in Colombia during the first half of the year continued to rise, continuing with the notable recovery of GDP observed in 2021 . This good performance has been due to the strengthening of domestic demand, driven mainly by household consumption. Exports other than mining and coffee, as well as those of services, wholesale and retail trade, manufacturing industries, and public administration and defense, also contributed to maintaining the dynamism of economic activity. In this way, the growth for the second quarter as reported by the National Administrative Department of Statistics (DANE) was 12.6% compared to the same period of 2021, which exceeded expectations (DANE, 2022).

For the remainder of the year, a moderation in the growth rate is expected in a less favorable international environment, characterized by tighter external financial conditions and lower growth in trading partners. On this basis, the technical team of Banco de la Republica (Bank of the Republic) forecasts GDP growth of 6.9% for 2022, similar to that announced by the OECD for Colombia, which would place the country as the fastest growing economy among members. of that organization, as well as the most dynamic among the medium and large economies of Latin America (Banco de la Republica, 2022).

The sustained recovery of GDP has been reflected in the progressive strengthening of the labor market, which continues to recover in the first months of 2022. By August 2022, the unemployment rate of the national total was 10.6%, which represented a reduction of 2.2 percentage points compared to the same month of 2021 (12.9%). The unemployment rate in all 13 cities and metropolitan areas was 10.8%, which represented a reduction of 2.5 percentage points compared to the same month in 2021 (13.4%). The overall participation rate was 65.1%, which meant an increase of 1.8 percentage points compared to August 2021 (63.3%) (National Statistics Department, 2022).

 

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4.5.2. Monetary Policy

On October 28, 2022, the Board of Banco de la República decided to increase in 100 pbs the monetary policy interest rate, up to 11,0% (Graphic 8), maintaining the adjustment that has been applied since a year ago, considering that the inflation and its expectative remains significantly above of the goal (3.0%). Total inflation in October was in 12,22%, higher than the September data that was 11,4%; this is explained principally by the annual variation of food and non-alcoholic drinks prices, accommodation, sanitation, electricity, gas and other fuels. Basic inflation (not including food and regulated) keep an ascendent tendency and reached the 9,15% annual in the same month.

 

 

 

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4.5.3. Tax Policy

The national government maintains an absolute commitment to the sustainability of public finances, in line with compliance with the Fiscal Rule. In 2020 and 2021, the parametric mechanism of the Fiscal Rule was suspended due to the COVID-19 pandemic and its effects. As of 2022 the calculation of operational goals was resumed under the new Fiscal Rule with a strengthened institutionality.

The central scenario contemplates that the National Government would comply with the Fiscal Rule in 2023, while a primary surplus of 0.2% of GDP is reached and a total balance of -4% of GDP. The reduction in the fiscal deficit compared to 2022 is mainly a consequence of an increase in revenues derived from the capitalization of the oil boom, the effects derived from policy measures already in effect, including the fight against tax evasion and the income from the 2021 tax reform (Ministry of Finance and Public Credit, 2022).

On August 8, 2022, the Ministry of Finance filed before the House of Representatives the draft Tax Reform Law for Equality and Social Justice. It is estimated that the collection will be approximately 20 trillion pesos in 2023 (1.37% of GDP), 1.3% of GDP in 2024 and 1.24% in 2024 and 2025. The reform has the objectives of: (i) ensure sufficient financing of social spending, essential to eradicate hunger, reduce poverty and inequality, (ii) promote productive development, necessary to improve the quality of life of Colombians and advance productive transformation; and, (iii) expand the sources of income necessary for the stability of public finances (Ministry of Finance and Public Credit, 2022). As of November 17, 2022, the text of the reform is up for presidential sanction, after having been approved and reconciled in the Congress of the Republic.

Investment flows to Colombia

After the strong outflow of investment flows in international fixed income securities dedicated to emerging markets during the first half of 2020, a recovery occurred in the second half of 2020 and at the beginning of 2021. However, 2022 has been a year with strong outflows that made the cumulative as of October 5 of this year for emerging countries approximately USD 76,000 million outflows.

 

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Regarding Colombia, the behavior of the flows of funds dedicated to the Colombian Global Bonds has not been very different and despite some inflows, the accumulated during the year is USD 317 million in outflows, as shown in the Graphic 10.

 

4.5.4. Risk Perception

Additionally, through 2022 credit risk perception represented in the emerging market bonds index (EMBI+)⁸ has increased, especially after the Russian invasion to Ukraine on February 24. Risk perception for Colombia has maintained an upwards behavior, with a variation of approximately 167 pbs, reaching levels not observed since 2009. Also is relevant to mention that the EMBI+ Colombia is above the EMBI+ Global, situation that has not occurred since the year 2004, which in turn is explained by local and external factors (Graphic 11).

 

8	The index represent the difference between the interest rates of a bond basket issued by emerging countries versus a bond basket issued by the US Treasury with similar characteristics.

 

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4.5.5. Credit Rating

In the year 2020, due to the shock of the COVID-19 pandemic that caused the first economic recession in Colombia after two decades, the Nation suffered the deterioration of its public finances as result of a pressure in the expense and less inflows. This affected the trajectory of fiscal consolidation and generated an increase in the debt above 60% of the GDP. Before this challenging landscape and the uncertainty of the progress of the COVID-19 pandemic, in the first semester of 2021, two credit rating agencies reviewed Colombia’s credit rating from BBB- to BB+, as presented in Table 2.

Table 2. Colombia Sovereign Ratings

 

Agency		Long term foreign exchange		Long term local exchange		Outlook		Date of last change in rating or outlook
Standard & Poor’s		BB+		BBB-		Stable		May the 19th 2021
Fitch		BB+		BB+		Stable		July the 1st 2021
Moody’s		Baa2		Baa2		Stable		October the 6th 2021

Source: Subdirection of External Financing of the Ministry of Finance and Public Credit.

 

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4.5.6. Financing Levels

As showed in Graphic 12 and in the Graphic 13, financing rates have increased considerably during the last year, not only because of the increase in the spread but also because of the increase in the rates of treasuries, that currently are in rates of 8,37% for 10 years and 8,58% for 30 years; and spreads of 427 for 10 years and 438 for 30 years.

 

 

25

4.5.7. Issuance Strategy

Through the last years, the Nation has achieved its strategic objective of building liquid and efficient yield curves, keeping proper amounts in the reference bonds, as showed in Graphic 14. However, under the current international context of increases in interest rates, an upward displacement in the yield curve has been appreciated and, as consequence, a fall in the price of the bonds, which are currently at discount, increase the current yield levels and in turn will be reflected in the financing rates.

 

26

Regarding curves in dollars, through the last years they have been oriented towards the creation of benchmarks, to both, 30 and 10 years, due to the creation of this point of reference in the treasuries curve. Similarly, focus has been made in issuances of big size aimed to ensure that since they issuance, the bonds have the necessary liquidity to avoid negotiation frictions, protecting the efficiency of its long term curve.

On the other hand, the Nation continues with its strategy of diversification in the source of financing in foreign currencies different of the US dollars. This as part of the policy of optimization of the financing sources and considering the volatility of the markets in the last years as the different strategies of monetary policy of each region.

The Nation has not issued global bonds in euros since March 26, 20216 when achieved financial resources through the issuance of a new Global Bond in euros for an amount of 1,350 million of euros due in 10 years.

 

27

Also, the Nation has not participated in the Japanese market since November 18, 2009 with the issuance of a 10 years Samurai bond for 45,000 million JPY (USD 504 million). However, under the current international context and the financial needs set forth for the 2023 and 2024 terms, the government must have flexibility to access to different markets. In the following graphics the behavior of the 2026 bond in euros and rates in yens are showed.

 

 

 

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4.5.8. Thematic Bond

Financial markets reflect each more the relevance that sustainable development has for investors in their investment decisions. As recognition to this interest, the relationship between environmental, social and governance factors and the yield of the instruments, the issuance of thematic bonds increases more and more, principally, green, social and sustainable bonds.

The country, since 2021 started its participation in this markets through: (i) the adoption and publication of the reference framework of green sovereign bonds of Colombia (Investor Relations Colombia [IRC], 2022), through Resolution 1687 of July 19, 2021⁹; (ii) publication of the first project portfolio of eligible green expenses; (iii) the publication of independent third party opinion, Vigeo Eiris, part of Moodys ESG solutions; and, (iv) the issuance of TES in the local market through 3 auctions of a security due in 2031 as showed in Table 3, converting Colombia in the second country in the region, after Chile, to issue green sovereign bonds and the first to make it in their local market.

 

9	Through which an extension to the authorizations conferred to the national government to execute external and internal public credit operations assimilated to the previous, and to guarantee payment obligations of other entities, and other dispositions are enacted.

 

29

Table 3. Green TES Auctions

 

Date of Offering		29-sep-21				27-oct-2 1				29-jun-22
Issuance Maturity Coupon							26-mar-21 26-mar-3 17,00	%
Term							10 anos
Yield			7,56	%			7,88	%			11,55	%
Cash (millions of pesos)			835.525				650.000				500.000
Nominal amount issued (millions of pesos)			836.619				650.000				644.895
Bid to Cover (a)			4,6				1,5
Greenium			7 pbs				15 pbs				-0,5 pbs

Notes: (a) number of times that the secuity has been bidded during the auction, over the issued amount. Includes the non competitive offering carried out on October the 8th 2021.

Source: Subdirection of Internal Financing of the Nation (2022).

Finally, on August 5, 2022 the country adopted the Green, Social and Sustainable Colombia’s Sovereign Bonds Reference Framework (IRC, 2022), that sets forth the principles that must be followed for the selection, evaluation, management or resources and report commitments to investors in the projects included in the National General Budget, associated to potential issuance of green, social and sustainable bonds, that allow to contribute the compliance of Colombia’s commitments in environmental and social matters, including the Paris Treaty and the Objectives of Sustainable Development.

4.5.9. Other Financial Sources

Under the current international context, of high volatility and uncertainty in the markets, the Nation is evaluating the execution of different public credit operations, by virtue of the set forth in Decree 1068 of 2015, understood as those operations that are intended to provide the state entity of resources, goods or services with a term for their payment, as well as those through which the state entity acts as a joint debtor or when granting guarantees on monetary obligations with a term for their payment.

 

30

Within these operations are included, among others, the contracting of loans (syndicated loans, syndicated loans with guarantee), the issuance, subscription and placement of public debt securities (guaranteed bonds), financing with suppliers and the granting of guarantees for monetary payment obligations with a term for payment.

5. OBJECTIVES

 

1.

To guarantee that the Nation receives the authorization to finance external needs, through public credit operations with sufficient anticipation, in order to provide sufficient room for maneuver to carry out financing and/or pre-financing operations that allow to contract the necessary cash resources.

 

2.	To have sufficient flexibility to be able to use the most favorable source of financing for the Nation, according to market conditions.

 

3.	To access the international capital markets in a timely and sufficient manner and continue to comply with the Government’s strategic objective of building liquid and efficient yield curves, financing or pre-financing the needs of the Nation’s general budget.

6. RECOMMENDATIONS

The Ministry of Finance and Public Credit and the National Planning Department recommend to the National Council of Economic and Social Policy:

 

1.	To issue a favorable opinion for the Nation to contract operations related to external public credit to pre-finance and/or finance budget appropriations for the 2023 and 2024 terms, up to USD 5,500 million, or its equivalent in other currencies.

 

31

Bibliography

European Central Bank. (October 19, 2022). European Central Bank. Retrieved from https://www.ecb.europa.eu/stats/macroeconomic_and_sectoral/hicp/html/index.es.html

European Central Bank. (September 8, 2022). Monetary policy statement. Obtained from: https://www.ecb.europa.eu/press/pressconf/2022/html/ecb.is220908~cd8363c58e.es.html

Bank of Japan. (July 16, 2021). Outlook for Economic Activity and Prices (July 2021).

Retrieved from https://www.boj.or.jp/en/mopo/outlook/gor2107a.pdf

Bank of Japan. (September 22, 2022). Monetary policy statement. Retrieved from https://www.boj.or.jp/en/announcements/release_2022/k220922a.pdf

Bank of Japan. (July 21, 2022). Economic Activity and Price Perspectives (July 2022).

Retrieved from https://www.boj.or.jp/en/mopo/outlook/gor2207a.pdf

Bank of the Republic. (July 2022). Report of the Board of Directors to the Congress of the Republic. Retrieved from https://repositorio.banrep.gov.co/bitstream/handle/20.500.12134/10469/informe congreso-julio-2022.pdf

Bank of the Republic. (October 28, 2022). The Board of Directors of Banco de la Republica unanimously decided to increase the monetary policy interest rate by 100 basis points (bp), bringing it to 11%. Retrieved from https://www.banrep.gov.co/es/juntadirectiva-banco-republica-decidio-unanimidad-incrementar-100-puntos-basicos-pb-tasa-interes

Bloomberg. (March 11, 2021). Biden Signs $1. 9 Trillion Bill, Teeing Up Aid as Soon as Weekend. Obtained from Bloomberg.

Bloomberg. (July 1, 2021). The Federal Reserve Will Taper, But Don’t Freak Out: Bill Dudley.

Bureau of Labor Statistics. (2022). Economic News Releases. Retrieved from https://www.bis.gov/bls/newsrels.htm

European Commission. (March 2, 2022). Fiscal policy guide for 2023. Retrieved from

https://economy-finance.ec.europa.eu/economic-and-fiscaI-governance/stability-and-growthpact/fiscal-policy-guidance-2023_en

National Administrative Department of Statistics. (August 16, 2022). DANE. Retrieved from https://www.dane.gov.co/index.php/statistics-by-subject/national-accounts/quarterly-national-accounts/pib-itechnical-information

 

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National Department of Statistics. (September 2022). Working market. Retrieved from https://www.dane.gov.co/index.php/estadisticas-por-tema/mercado-laboral/empleo-ydesempleo#:~:text=Para%20el%20mes%20de%20agosto,2021%20(61%2C3%25)

International Monetary Fund. (April 2021). Prospects for the world economy. Retrieved from https://www.imf.org/es/Publications/WEO/lssues/2021 /03 /23 /world-economic-outlook april-2021

International Monetary Fund. (October 2022). World Economic Outlook. Retrieved from https://www.imf.org/es/Publications/WEO/lssues/2022/10/11/world-economic outlook-october-2022

Investor Relations Colombia. (2022). Investor Relations Colombia—Sustainable Bonds. Obtained from Investor Relations Colombia—Sustainable Bonds:

https://www.irc.gov.co/webcenter/portal/IRCEs/pages_Deuda/bonosverdessocialesInvestorRelationsColombia.(2022)./RC-GreenBonds.

Obtained from IRC—Green Bonds:

https://www.irc.gov.co/webcenter/portal/lRCES/pages_Deuda/bonosverdes

Ministry of Finance and Public Credit. (June 2022). Fiscal Framework of Medium Term 2022.

Obtained from

https://www.minhacienda.gov.co/webcenter/ShowProperty?nodeld=%2ConnectionFonContent%2FWCC_CLUSTER-197963%2F%2FidcPrimaryFile&revision=latestreleased

Ministry of Finance and Public Credit. (October 6, 2022). Collection of the Reform Tax for Equality and Social Justice to reach $24.4 billion in 2026. Retrieved from https://www.minhacienda.gov.co/webcenter/ShowProperty?nodeld=%2FConexionContent%2FWCC_CLUSTER-204187%2F%2FidcPrimaryFile&revision=latestreleased

Congressional Budget Office. (July 2021). Obtained from https://www.cbo.gov/system/files/2021-07/57218-Outlook.pdf

Congressional Budget Office. (May 2022). Obtained from https://www.cbo.gov/system/files/2022-05/57950-Outlook.pdf

Refinitiv. (August 30, 2022). The sharp inversion of the US Treasury yield curve may accelerate the recession. Retrieved from https://www.refinitiv.com/es/blog/market-insights/the-strong-inversion-of-the-us-treasury-yield-curve-can-accelerate-the-recession

Federal Reserve. (March 15, 2020). Minutes of the Federal Open Market Committee. Retrieved March 15, 2020: https://www.federalreserve.gov/monetarypolicy/fomcminutes20200315.htm

 

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Federal Reserve. (December 16, 2020). Minutes of the Federal Open Market Committee.

Retrieved from https://www.federalreserve.gov/monetarypolicy/fomcminutes20201216.htm

Federal Reserve. (June 15, 2021). Minutes of the Federal Open Market Committee. Obtained from https://www.federalreserve.gov/monetarypolicy/files/fomcminutes20210616.pdf

Federal Reserve. (September 22, 2022). Minutes of the Federal Open Market Committee. Retrieved from https://www.federalreserve.gov/monetarypolicy/fomcminutes20220921.htm

Federal Reserve. (June 17, 2022). Monetary Policy Report. Obtained from https://www.federalreserve.gov/monetarypolicy/files/20220617_mprfullreport.pdf

Reuters. (October 22, 2022). Japan reveals $200 billion in new spending to alleviate the inflation pain. Retrieved from https://www.reuters.com/world/asia-pacific/japan compile-200-bln-extra-budget-spending-package-2022-10-28/

 

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[MINHANCIENDA BANNER]		Exhibit B

THE UNDERSIGNED TECHNICAL SECRETARY OF THE INTERPARLIAMENTARY COMISSION OF PUBLIC CREDIT

IT IS HEREBY STATED:

That, in its session held on December 14, 2022, the Interparliamentary Commission of Public Credit unanimously issued a single favorable opinion to the Nation—Ministry of Finance and Public Credit, to execute transactions related to External Public Credit up to two thousand millions of dollars of the United States of America (U.S. $2,000,000,000.00) or its equivalent in other currencies, to finance budget appropriations for the 2023 and 2024 terms.

Sincerely,     

[signature]

Claudia Marcela Gómez Vásquez

Technical Secretary

Issued in Bogotá D.C., on December 14^th, 2022.

Carrera 8 Nº 6 C 38 Bogota D.C. Colombia

Postal Code 111711

Conmutator (57) 601 3811700 Outside Bogota 01-9000-910071

relacionciudadano@minhacienda.gov.co

www.minhacienda.gov.co

Exhibit C

RESOLUTION 0192

(January 24, 2023)

Whereby the Nation is authorized to issue, subscribe and place public external debt securities in the international capital markets, up to the amount of TWO THOUSAND MILLION OF DOLLARS (U.S. $2,000,000,000) of the United States of America or its equivalent in other currencies; and to execute an operation of external public debt management up to the amount of ONE THOUSAND MILLION OF DOLLARS (U.S. $1,000,000,000) of the United States of America or its equivalent in other currencies; and other provisions are decreed.

THE GENERAL VICE MINISTER OF THE MINISTRY OF FINANCE AND PUBLIC CREDIT IN CHARGE OF THE LABOR POWERS OF THE MINISTER OF FINANCE AND PUBLIC CREDIT

Exercising his statutory powers, especially those conferred by the Decree 0024 of January 12, 2023, and article 2.2.1.3.2 and article 2.2.1.4.3, Decree 1068 of 2015 and;

WHEREAS

Article 2.2.1.1.1, Decree 1068 of 2014 define the transactions of public credit as such transactions which objective is to grant to a government entity of resources, assets or services with a maturity date, within there are contained, among other, the issuance, subscription and placement of public credit securities;

Subsection 1 of article 2.2.1.3.1, Decree 1068 of 2015 sets forth that “are public debt securities the bonds and other securities of credit content issued by Governmental Entities within the framework of public credit, with a maturity date”;

Resolution 0192		January 24, 2023		Page 2 of 4

(Cont.) The Resolution whereby the Nation is authorized to subscribe and place public external debt securities in the international capital markets, up to the amount of TWO THOUSAND MILLION OF DOLLARS (U.S. $2,000,000,000) of the United States of America or its equivalent in other currencies and to execute an external public debt liability management operation for an amount of ONE THOUSAND MILLION OF DOLLARS (USD 1,000,000,000) of the United States of America or its equivalent in other currencies; and other provisions are decreed.

 

Article 2.2.1.3.2, Decree 1068 of 2015 sets forth that “The issuance and placement of external public debt, including thematic securities, on behalf of the Nation within the framework of the authorizations conferred to the National Government to celebrate transactions of public credit and assimilated will require authorization, given by a resolution of the Ministry of Finance and Public Credit, which could be granted once the following requirements are meet: 1. Favorable concept of the National Council of Social and Economic Policy—CONPES; and 2. Single Concept from the Interparliamentary Commission of Public Credit, in the case of external debt securities with a maturity term longer than one (1) year”;

Article 24, Law 185 of 1995 establishes that, for any effect set forth in subsection 5 of paragraph 2 of article 41, Law 80 of 1993, the Interparliamentary Commission of Public Credit will issue a definitive concept that will make possible to begin with the necessary arrangements for the transactions of public credit and a definitive concept that will make possible the executions of them in any particular case. The transactions related to the issuance, subscription and placement of bonds and securities are exempted of the aforementioned, in this case the Interparliamentary Commission of Public Credit will issue, once, its opinion.

Pursuant document CONPES 4108 of November 22, 2022, the National Council of Social and Economy Policy -CONPES- issued a favorable opinion “for the Nation to contract transactions related to external public credit for refinancing and/or financing budget appropriations for the terms 2023 and 2024, up to U.S. $ 5,500 million, or its equivalent in other currencies;

Pursuant the certification issued on December 14, 2022 by the Technical Secretary of the Interparliamentary Commission “in the session held on December 14, 2022 the Interparliamentary Commission of Public Credit issue unanimously a single favorable opinion to the Nation—Ministry of Finance and Public Credit, to execute transactions related with External Public Credit for up to two thousand millions of dollars of the United States of America (U.S. $2,000,000,000) or its equivalent in other currencies, to finance budget appropriations for the terms 2023 and 2024”;

Based on the Memorandum numbered 3-2023-000819 of January 23, 2023, the Director General of Public Credit and National Treasury certifies that “in virtue of the favorable concept referred hereto (…), the Nation has not executed any issuance of external bonds in the international capital markets, therefore has a an authorized and not used quota of TWO THOUSAND MILLION DOLLARS (U.S. $2,000,000,000) of the United States of America or its equivalent in other currencies;

Resolution 0192		January 24, 2023		Page 2 of 4

(Cont.) The Resolution whereby the Nation is authorized to subscribe and place public external debt securities in the international capital markets, up to the amount of TWO THOUSAND MILLION OF DOLLARS (U.S. $2,000,000,000) of the United States of America or its equivalent in other currencies and to execute an external public debt liability management operation for an amount of ONE THOUSAND MILLION OF DOLLARS (USD 1,000,000,000) of the United States of America or its equivalent in other currencies; and other provisions are decreed.

 

Through, External Resolution Nº 17 of 2015 and the External Regulatory Circular DODM—145 of October 30, 2015, the Board of the Bank of the Republic and the Bank of the Republic, respectively, established the financial conditions of the issuance and placement of the securities and of the transactions of external indebtedness of the Nation, the territorial entities and their decentralized;

Pursuant first subsection of article 2.2.1.1.2, Decree 1068 of 2015, “Constitute proper transactions of liabilities management those that do not increase the net indebtedness of the governmental entity and contribute to improve the debt profile in term, interest rate, exposition to foreign currency, among others. This transactions, as do not constitute a new financing, do not affect the indebtedness quota.”;

Article 2.2.1.4.3 of Decree 1068 of 2015 sets forth that “The execution of operations for the management of the Nation’s external debt will require authorization granted through resolution of the Ministry of Finance and Public Credit, which could be granted only if the financial justification of the operation and their effects over the debt profile are demonstrated”

The Nation plans to execute an operation of external debt management through the substitution and/or repurchase of securities of external public debt conditioned to the issuance of securities of external public debt that, in turn, the Nation plans to execute based on the authorization granted through the present Resolution;

Resolution 0192		January 24, 2023		Page 2 of 4

(Cont.) The Resolution whereby the Nation is authorized to subscribe and place public external debt securities in the international capital markets, up to the amount of TWO THOUSAND MILLION OF DOLLARS (U.S. $2,000,000,000) of the United States of America or its equivalent in other currencies and to execute an external public debt liability management operation for an amount of ONE THOUSAND MILLION OF DOLLARS (USD 1,000,000,000) of the United States of America or its equivalent in other currencies; and other provisions are decreed.

 

Based on Memorandum Nº 3-2023-000819 of January 23, 2023, the General Director of Public Credit and National Treasury informed that the securities over which the liabilities management operation will be executed are the following:

 

Bond

Currency

Maturity Date

Coupon

Current Amount

Global Bond 2024

USD

Feb 26, 2024

4,000

%

U.S. $

1,185,133,000

Global Bond 2024

USD

May 21, 2024

8,125

%

U.S. $

781,828,000

Pursuant Memorandum Nº 3-2023-000627 of January 19, 2023 the Sub directorate of External Financing of the Nation of the General Direction of Public Credit and National Treasury of the Ministry of Finance and Public Credit requested an opinion to the Sub directorate of Risk over the convenience and effect that the aforementioned operation of liabilities management would have over the debt profile, in concordance with articles 2.2.1.1.2 and 2.2.1.4.3,Decree 1068 of 2015;

Through Memorandum Nº 3-2023-000746 of January 20, 2023 the Sub directorate of Risk of the General Direction of Public Credit and National Treasury of the Ministry of Finance and Public pointed that: “(…) both conditions for an Operation of Liabilities Management are meet, in light of Decree 1068 of 2015, amended by Decree 1575 of 2022: not to increase the net indebtedness and contribute to the improvement of the debt profiles. Finally, based on the general guidelines of the Strategy of Management of Mid Term Debt in force at the date, the Sub directorate of Risk do not present objection before the Operation of Liabilities Management proposed by the Sub directorate of External Financing as showed in the financial justification presented, in concordance with article 2.2.1.4.2, Decree 1068 of 2015 amended by Decree 1575 of 2022, given that the operation do not increase the net public indebtedness and contributes to improve the debt profile in terms of maturity concentrations and average life”;

RESOLVES

Article 1. Authorization. To authorize the Nation to issue, subscribe and place securities of external public debt in the international capital markets up to the amount of TWO THOUSAND MILLION OF DOLLARS (U.S. $2,000,000,000) of the United States of America or its equivalent in other currencies; and to execute an operation of external public debt management up to the amount of ONE THOUSAND MILLION OF DOLLARS (U.S. $1,000,000,000) of the United States of America or its equivalent in other currencies, through the substitution and/or repurchase of the following external debt securities issued by the Nation:

Resolution 0192		January 24, 2023		Page 2 of 4

(Cont.) The Resolution whereby the Nation is authorized to subscribe and place public external debt securities in the international capital markets, up to the amount of TWO THOUSAND MILLION OF DOLLARS (U.S. $2,000,000,000) of the United States of America or its equivalent in other currencies and to execute an external public debt liability management operation for an amount of ONE THOUSAND MILLION OF DOLLARS (USD 1,000,000,000) of the United States of America or its equivalent in other currencies; and other provisions are decreed.

 

Bond

Currency

Maturity Date

Coupon

Current Amount

Global Bond 2024

USD

Feb 26, 2024

4,000

%

U.S. $

1,185,133,000

Global Bond 2024

USD

May 21, 2024

8,125

%

U.S. $

781,828,000

Article 2. Financial Conditions. The external public debt securities to be issued referred to in the previous article will be subject to the financial conditions established in the rules issued by the Board of the Bank of the Republic or by the Bank of the Republic, in compliance with the guidelines that this one establishes.

Article 3. Other terms and Conditions. The other terms, conditions and characteristics of the issuance authorized in the present Resolution will be established by the General Direction of Public Credit and National Treasury of the Ministry of Finance and Public Credit, considering the following characteristics:

 

Maturity Term:		More than two (2) years in accordance with the market to be accessed.
Interest Rate:		Fixed or variable.
Other expenses and Commissions:		Those proper of the market for this type of transactions.

Article 4. Authorization for related transactions. To authorize the Nation to execute all the related transactions of public credit and management of public debt describe in article 1 of this Resolution.

Resolution 0192		January 24, 2023		Page 2 of 4

(Cont.) The Resolution whereby the Nation is authorized to subscribe and place public external debt securities in the international capital markets, up to the amount of TWO THOUSAND MILLION OF DOLLARS (U.S. $2,000,000,000) of the United States of America or its equivalent in other currencies and to execute an external public debt liability management operation for an amount of ONE THOUSAND MILLION OF DOLLARS (USD 1,000,000,000) of the United States of America or its equivalent in other currencies; and other provisions are decreed.

 

Article 5. Taxes. Pursuant article 7, Law 488 of 1998, the payment of principal, interests, commissions and other concepts related with the transactions of external

public credit, will be exempted of any class of taxes, stamps, contributions and liens of national character, only when they are executed to persons without residence or domicile in the country.

Article 6. Other rules apply. The Nation—Ministry of Finance and Public Credit shall comply with any other applicable rules of any nature, especially with External Resolution Nº 1 of 2018 of the Board of Bank of the Republic and those rules that amends it.

Article 7. Validity and Publication. The present Resolution shall be valid from the date of publication in the Official Journal. This requirement is understood to have been met through the instruction given by the Director General of Public Credit and National Treasury of the Ministry of Finance and Public Credit, as provided by Article 18, Law 185 of 1995.

LET IT BE PUBLISHED, NOTIFIED AND EXECUTED

Bogota D.C., January 24, 2023

[Signed]

DIEGO ALEJANDRO GUEVARA CASTAÑEDA

GENERAL VICE MINISTER OF THE MINISTRY OF FINANCE AND PUBLIC CREDIT IN CHARGE OF THE LABOR POWERS OF THE MINISTER OF FINANCE AND PUBLIC CREDIT

Resolution 0192		January 24, 2023		Page 2 of 4

(Cont.) The Resolution whereby the Nation is authorized to subscribe and place public external debt securities in the international capital markets, up to the amount of TWO THOUSAND MILLION OF DOLLARS (U.S. $2,000,000,000) of the United States of America or its equivalent in other currencies and to execute an external public debt liability management operation for an amount of ONE THOUSAND MILLION OF DOLLARS (USD 1,000,000,000) of the United States of America or its equivalent in other currencies; and other provisions are decreed.

 

Approved by: Lizeth Camila Erazo / Claudia Marcela Gómez

Elaborated by: Juliana López / Diego Figueroa Falla

Office: Sub directorate of External Financing of the Nation / Group of Legal Affairs

Exhibit 4

[Letterhead of Arnold & Porter Kaye Scholer LLP]

February 2, 2023

Republic of Colombia

Ministry of Finance and Public Credit

Carrera 8, No. 6C-38, Piso 1

Bogotá D.C., Colombia

Ladies and Gentlemen:

We have acted as special United States counsel to the Republic of Colombia (the “Republic”) in connection with: (i) the preparation of (a) the registration statement under Schedule B, Registration No. 333-253587 (the “Registration Statement”), filed with the Securities and Exchange Commission (the “Commission”) under the Securities Act of 1933, as amended (the “Act”), pursuant to which the Republic has registered debt securities and warrants to be offered and sold from time to time as set forth in supplements to the Prospectus contained in the Registration Statement as filed with the Commission under which the Republic may sell securities having an aggregate principal amount of up to $12,000,000,000 (or its equivalent in other currencies), (b) the Prospectus dated April 15, 2021 forming a part of the Registration Statement and (c) the final Prospectus Supplement dated January 24, 2023 (the “Prospectus Supplement”) relating to the issuance by the Republic of its 7.500% Global Bonds due 2033 (the “Securities”) and (ii) the transactions contemplated by the Underwriting Agreement (the “Underwriting Agreement”), dated as of January 24, 2023, among the Republic, BBVA Securities Inc., Itau BBA USA Securities, Inc. and J.P. Morgan Securities LLC. We are familiar with the Indenture, dated as of January 28, 2015 as amended and supplemented by the Supplemental Indenture thereto, dated as of September 8, 2015, (as amended and supplemented, the “Indenture”), between the Republic and The Bank of New York Mellon, as trustee. The Underwriting Agreement and the Indenture are collectively defined herein as the “Agreements.”

In rendering the opinion expressed below, we have examined such certificates of public officials, government documents and records and other certificates and instruments furnished to us and have made such other investigations as we have deemed necessary in connection with the opinion set forth herein. Furthermore, we have assumed:

Republic of Colombia

Ministry of Finance and Public Credit

February 2, 2023

Page 2

 

(i) the genuineness of all signatures; (ii) the authenticity of all documents submitted to us as originals; (iii) the authority of the Republic to enter into the Agreements and cause the issuance of the Securities; and (iv) the conformity to authentic originals of all documents submitted to us as copies. We have further assumed that there are no documents, agreements, understandings or course of dealing among or between any of the parties to the Agreements or others that would expand, modify, amend, supplement, terminate or rescind the respective rights and obligations of such parties as set forth in the Agreements or that otherwise would have an effect on the opinions rendered herein.

The opinion set forth herein is limited to the federal law of the United States of America and the law of the State of New York, and we do not express any opinion herein concerning the laws of any other jurisdiction. Insofar as the opinion set forth herein relates to matters of the laws of the Republic, we have, without having made any independent investigation with respect thereto, assumed the correctness of, and relied upon, the opinion of Claudia Marcela Gomez Vásquez, Head of the Legal Affairs Group of the General Directorate of Public Credit and National Treasury of the Ministry of Finance and Public Credit of the Republic, a copy of which is being filed as Exhibit 3 to Amendment No. 2 to the Republic’s Annual Report on Form 18-K for its fiscal year ended December 31, 2021, and our opinion set forth herein is subject to any and all exceptions and reservations set forth therein.

Based upon and subject to the foregoing, we are of the opinion that when the Securities have been duly authorized, issued and executed by the Republic and authenticated, delivered and paid for as contemplated by the Agreements, the Prospectus and the Prospectus Supplement, the Securities will constitute valid and legally binding obligations of the Republic under the laws of the State of New York.

We note that: (A) a New York statute provides that a judgment rendered by a court of the State of New York in respect of an obligation denominated in a currency other than U.S. dollars (a “foreign currency”) would be rendered in such foreign currency, and would be converted into U.S. dollars at the rate of exchange prevailing on the date of entry of the judgment; and (B) a judgment rendered by a federal court in New York in respect of an obligation denominated in a foreign currency may be expressed in U.S. dollars, provided that we express no opinion as to the rate of exchange such court would apply. In addition, we express no opinion herein as to any applicable foreign laws or government actions affecting creditors’ rights.

Republic of Colombia

Ministry of Finance and Public Credit

February 2, 2023

Page 3

 

We hereby consent to the filing of this opinion as an exhibit to Amendment No. 2 to the Republic’s Annual Report on Form 18-K for its fiscal year ended December 31, 2021 and to the reference to this firm under the heading “Validity of the Securities” in the Prospectus and under the heading “General Information — Validity of the Bonds” in the Prospectus Supplement. In giving the foregoing consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Act or the rules and regulations of the Commission thereunder.

Very truly yours,

/s/ Arnold & Porter Kaye Scholer LLP

Exhibit 5

RECENT DEVELOPMENTS

This section provides information that supplements the information about Colombia contained in Colombia’s 2021 Annual Report, as it may be amended from time to time. To the extent the information in this section is inconsistent with the information contained in the 2021 Annual Report, as amended, the information in this section replaces such information. Capitalized terms not defined in this section have the meanings ascribed to them in the 2021 Annual Report, as amended to date.

Republic of Colombia

Domestic Initiatives

Due to rising international oil prices and exchange rate levels, the Fuel Price Stabilization Fund (“FEPC”) began accumulating high deficits during 2022. The macroeconomic and financial context could generate a larger differential in the FEPC price than projected in the Medium-Term Fiscal Framework. Therefore, the Government is working on the implementation of a plan to reduce such deficit. This plan consists of i) an increase in fuel prices to reduce the differential between local and international prices, and ii) the payment of the deficit that the fund is accumulating, in compliance with fiscal rule. On December 21, 2022, the Minister of Finance and Public Credit, José Antonio Ocampo, announced a new transfer from the Government to the FEPC of Ps. 4 trillion, the last transfer of a total of Ps. 18.2 trillion allocated to the FEPC during 2022.

On October 20, 2022, Bill 173 of 2022, which amends the Political Constitution of Colombia to establish the Agrarian and Rural Jurisdiction, was approved in the second debate in the Plenary of the House of Representatives. The creation of the Agrarian and Rural Jurisdiction was contemplated as part of the Peace Agreement and a corresponding Constitutional Court order, with the goal that all residents in the countryside have access to justice and can resolve their conflicts peacefully in order to resolve existing problems and avoid the generation of new ones.

On November 1, 2022, through Decree 2113 of 2022, the Government declared a National Disaster Situation for 12 months, due to the rainy season caused by the “La Niña” natural phenomenon, which began in August 2022. The rainy season has caused flood threats in 22 departments of the country due to the probability of floods and flash floods, as well as a high probability of landslides in 519 municipalities of 24 of the country’s departments.

On November 17, 2022, the Congress approved the tax reform project, the legal and fiscal tool that will provide additional revenue to the Government of approximately Ps. 20 trillion. The main objectives of the tax reform are to: (i) ensure a sufficient financing of social spending, that in turn is essential to eradicate hunger and to reduce poverty and inequality, (ii) promote productive development necessary to improve the quality of life of Colombians and move forward in the productive transformation; and (iii) expand the sources of income necessary for the stability of public finances. On December 13, 2022, President Petro enacted the tax reform as Law 2277 of December 2022.

On November 15, 2022, the director of the National Planning Department, Jorge Iván González, released the first version of what will be the National Development Plan (“PND”) 2022-2026, “Colombia, World Power of Life, where the goals to be met in the short, medium and long term are defined in the next four years. This first version consists of 235 pages submitted for consideration by the National Planning Council, for discussion by representatives of the territorial entities and the different sectors that make up civil society (economic, social, ecological, and cultural). The main goals detailed in the PND are: land use planning around water and environmental justice; human security and social justice; right to food; globalization; productive transformation for life and climate action; and regional convergence. The process of elaboration of the PND is ongoing and is expected to include input from regional dialogues.

On December 22, 2022, the Minister of Labor, Gloria Inés Ramírez, announced the signing of the decree to increase the minimum wage for 2023. The minimum wage increased by 16% to Ps. 1,160,000 per month, and transportation aid increased by 20% to Ps. 140,000 per month.

Guerilla Activity

On August 19, 2022, the ELN released six members of the Armed Forces who had been kidnapped in the department of Arauca.

On October 4, 2022, President Petro announced the resumption of peace talks with the ELN.

On November 4, 2022, President Petro signed Law 2272 of 2022, which amended and extended Law 418 of Total Peace, allowing the Government to continue negotiations with armed insurgents and criminal organizations and to request the suspension of arrest orders against members of criminal organizations. Based on this new law, the Government has asked the Attorney General’s office to suspend some arrest orders against the members representing the Gaitanista Self-Defense Forces of Colombia and the Sierra Nevada organization so that their representatives can participate in peace talks with the Government.

On November 19, 2022, the High Commissioner for Peace, Danilo Rueda, and the Head of the ELN Delegation, Pablo Beltrán, confirmed that peace talks would resume on November 21, 2022, in Caracas, Venezuela.

On December 3, 2022, President Petro announced that after the start of a peace dialogue with the ELN, the parties agreed that the ELN would allow the displaced Embera indigenous populations to return to their territories.

On January 4, 2023, after the ELN publicly announced that the protocols for any proposed ceasefire would need to be agreed upon at a dialogue table, the Government suspended its bilateral ceasefire with the ELN and indicated that the ceasefire would be revisited in the next cycle of peace talks with the ELN. Additionally, the Government ratified the start of bilateral ceasefires with four illegal armed organizations: Segunda Marquetalia FARC-EP, Estado Mayor Central FARC-EP, the Gaitanista Self-Defense Forces of Colombia (AGC) and the Sierra Nevada Self Defense group.

On January 22, 2023, President Petro announced several governmental measures that would be taken to overcome road blockages caused by landslides in the southwestern region of the country, particularly those affecting the population of Rosas in the department of Cauca. These measures include the opening of alternative roads, the purchase of crops, the supply of fuel, establishing a limit on the price of liquefied gas, as well as other long-term actions related to the construction of more lanes, the agro-industrialization of Nariño and the expansion of the port of Tumaco for exports.

Criminal Activity

During the eleven-month period ended November 30, 2022, 12,634 incidents of homicide were reported, a decrease of 2.4% compared to the same period in 2021, during which 12,950 incidents of homicide were reported. During the eleven-month period ended November 30, 2022, 183 incidents of kidnapping were reported, compared to 150 incidents of kidnapping reported in the same period in 2021. Meanwhile, incidents of terrorism increased 136% from 218 during the eleven-month period ended November 30, 2021, compared to 515 during the same period of 2022.

Unconventional Reservoir Projects

On October 20, 2022, the Government announced that more than 330 current contracts for the exploration and extraction of hydrocarbons would have guarantees for their continuity and execution.

On November 3, 2022, the Minister of Mines and Energy, Irene Vélez, reassured the public that the Government would not end all mining and oil exploration and extraction in Colombia including in regions such as the Magdalena Medio. Instead, the Government plans to facilitate an energy transition guaranteeing the reliability and stability of the energy system, employment and economic resources coming from the sector.

On November 9, 2022, the Government, headed by the Minister of Mines and Energy, presented the “Construction of principles, methodology and launch of the Social Dialogue to define the Roadmap for the Just Energy Transition in Colombia, in the context of the United Nations Conference on Climate Change COP27, in Egypt. The roadmap for the energy transition designed to be built through technical analysis and existing regulations such as Law 2099 of 2021 and CONPES 4075 of 2022.

 

2

On November 16, 2022, during the “V Cumbre del Petróleo, Gas y Energía”, the Minister of Mines and Energy indicated that the Ministry established a technical committee together with the National Hydrocarbons Agency (ANH) and the Colombian Oil and Gas Association (ACP), to analyze 380 contracts currently in place and identify bottlenecks for those which are halted, due to public order, social conflict or environmental procedures, among others. Such review will be conducted in order to guarantee exploratory activities agreed to in the referred contracts, as well as to benefit from the contribution of contracts in the development and production phases.

On November 28, 2022, under the leadership of the Ministry of Mines and Energy, Grupo Energía de Bogotá signed an agreement with the municipalities of Riohacha and Maicao, in the department of La Guajira, to install photovoltaic solar power systems which will help expand the coverage of the energy service to 129 educational institutions and 362 community care units in these municipalities.

On December 12, 2022, the Special Assets Partnership (“SAE”) announced the signing of a memorandum of understanding with the Ministry of Mines and Energy and the National Mining Agency to improve the supervision over the management of companies dedicated to the exploitation, refining and commercialization of mineral resources. The parties aim to promote investment and combat organized crime. Additionally, the parties are contemplating the creation of a state-owned mining company composed of the two gold trading companies that SAE has in its portfolio, CIJ GUTIERREZ and MEPRECOL, to buy gold within Colombia and sell it on the international market.

On January 20, 2023, at the World Economic Forum in Davos, Switzerland, the Minister of Mines and Energy, Irene Vélez, confirmed the Government’s commitment to the country’s transition from an economy dependent on fossil resources to a productive economy. The Minister highlighted that the country has a plan to increase gas and oil reserves to support this transition and guarantee energy self-sufficiency, and that work is being done to promote current projects. The Minister also reiterated that the National Hydrocarbons Agency (ANH), reviewed the existing exploration and exploitation contracts in Colombia and determined that they would guarantee the national supply of oil and gas at least through the year 2037.

Corruption Investigations

On July 28, 2022, the Attorney General dismissed and disqualified for 12 years former senator Bernardo Miguel Elías Vidal, for acts of corruption, benefiting an Odebrecht firm in the processing of contractual agreements.

On September 28, 2022, the Attorney General dismissed and disqualified for 18 years the former president of the National Infrastructure Agency (“ANI”), Luis Fernando Andrade Moreno, for irregularities in the amendments to the Concession contract for the Ruta del Sol in Sector II (Puerto Salgar – San Roque), which favored the Ruta del Sol S.A.S. made up of companies from the Odebrecht group.

On January 10, 2023, the Office of the Attorney General announced that nine officials from ANI, would be charged in relation to alleged irregularities in the contracting of the second Puente Plato on the Ruta del Sol III.

On January 17, 2023, President Petro announced his support of the Minister of Defense in the face of recent announcements by the Guatemalan Prosecutor’s Office of a possible corruption investigation into the Minister.

Covid-19

As of January 3, 2023, a total of 90,101,737 million doses of COVID-19 vaccines have been administered in Colombia.

As of January 5, 2023, COVID-19 infections in Colombia totaled 6,484 active cases.

 

3

Monkeypox Virus

As of January 16, 2023, Monkeypox Virus infections in Colombia totaled 30 active cases.

Foreign Affairs, International Organizations and Migration

Migration

On September 26, 2022, the Norte de Santander border between Colombia and Venezuela was reopened, after being closed since February 2019.

On October 7, 2022, the Minister of Finance and Public Credit, José Antonio Ocampo, announced the signing of the International Coffee Agreement, with the goal of a more active and committed participation of public and private actors and to improve conditions and increase sustainability in the industry.

On October 18, 2022, the Ministry of Foreign Affairs announced that the United Kingdom would lift tourist visa requirements for Colombians starting on November 9, 2022.

On November 1, 2022, President Petro and President Nicolás Maduro of Venezuela met in person. This was the first meeting between the presidents of the two countries in approximately six years. During the meeting, the presidents discussed: (i) strengthening commercial ties with the reopening of the border of Colombia and Venezuela; (ii) the joint fight against drug trafficking; (iii) the fight for the defense of the Amazon rainforest; and (iv) the proposal for Venezuela to rejoin the Inter-American Human Rights System and the Andean Community (CAN).

On November 21, 2022, Migración Colombia began the delivery of Permits for Temporary Protection to Venezuelan migrants, which allow them to access the social services offered by the Government.

On January 5, 2023, the José Antonio Páez international bridge in Arauca, which connects Colombia and Venezuela, was fully reopened after seven years of being closed.

Economy

Gross Domestic Product

In the third quarter of 2022, real GDP grew by 7.0% in real terms compared to the same period of 2021.

According to preliminary data, in the third quarter of 2022 the manufacturing sector grew by 7.3% in real terms and represented approximately 12.3% of GDP, compared to 18.4% growth in the same period of 2021. Agriculture, livestock, fishing and forestry sector shrank by 1.1% in real terms in the third quarter of 2022 compared to the third quarter of 2021, and that sector accounted for approximately 5.7% of GDP. Construction activity increased by 13.8% in real terms in the third quarter of 2022, compared to an increase of 3.1% in the same quarter of 2021 and accounted for approximately 4.8% of GDP. Mining activity (including oil) increased by 0.25% in real terms in the third quarter of 2022, compared to an increase of 4.2% in the same period of 2021, and represented approximately 3.8% of GDP. Electricity, gas and water sector grew by 2.7% in real terms in the third quarter of 2022, compared to growth of 7.3% in the same period of 2021 and represented approximately 2.9% of GDP.

 

4

According to preliminary figures, gross fixed public investment represented 15.9% of GDP in the third quarter of 2022 and registered a growth of 1.6% in comparison to the same period of 2021. Gross fixed private investment, which represented 76.1% of GDP in the second quarter of 2022, registered a 14.6% increase compared to the same period in 2021.

Employment and Labor

The following table presents national monthly average rates of unemployment from January 2017 through November 2022, according to the methodology adopted by DANE:

National Monthly Unemployment Rates

 

		2017				2018				2019				2020				2021				2022
January			12.0	%			12.1	%			13.1	%			13.5	%			17.6	%			14.6	%
February			10.9				11.2				12.1				12.8				15.6				12.9
March			9.9				9.8				11.2				13.2				14.7				12.1
April			9.1				9.7				10.7				20.5				15.5				11.2
May			9.8				10.0				11.0				22.0				15.2				10.6
June			9.0				9.3				9.7				20.4				14.6				11.3
July			9.9				10.0				11.3				20.9				13.1				11.0
August			9.5				9.4				11.2				17.4				12.9				10.6
September			9.5				9.7				10.8				16.3				12.0				10.7
October			8.7				9.4				10.1				15.3				12.0				9.7
November			8.8				9.0				9.6				13.9				11.5				9.5
December			8.9				10.0				9.9				13.9				11.1

 

(1)	Unemployment rate is defined as the unemployed population divided by the labor force.

Source: DANE.

The following table presents the distribution of national employment by sector of the economy for the periods indicated:

National Quarterly Employment Rates by Sector

 

		2022
		First Quarter				Second Quarter				Third Quarter				Fourth Quarter
Agriculture, fishing, hunting and forestry			14.7	%			15.0	%			14.5	%
Mining and quarrying			1.2	%			1.3	%			1.1	%
Manufacturing			10.6	%			10.3	%			10.7	%
Electricity, gas and water supply			1.5	%			1.4	%			1.5	%
Construction			7.2	%			7.0	%			7.0	%
Retail, hotels and restaurants			25.1	%			24.4	%			24.9	%
Transport, storage and communications			9.0	%			9.3	%			9.0	%
Financial intermediation			1.9	%			1.8	%			2.0	%
Real estate, renting and business activities			8.7	%			8.6	%			9.1	%
Community, social and personal services			20.2	%			20.9	%			20.2	%
Total			100.0	%			100.0	%			100.0	%

Source: DANE. Calculations: Ministry of Finance.

 

5

Foreign Trade and Balance of Payments

Balance of Payments

In recent years, Colombia has registered deficits in the primary income of the current account because inflows from its foreign assets have not been sufficient to offset the interest payable on its foreign liabilities. According to preliminary figures, in the second and third quarter of 2022, Colombia registered a deficit in the primary income of the current account of US$4,606 million and US$4,702 million respectively. The secondary income category, however, registered inflows of US$2,914 million and US$3,096 million in the second and third quarter of 2022. In the second and third quarter of 2022, the deficit in the services category registered a deficit of US$1,344 million and US$987 million respectively, showing an improvement compared to the same periods of 2021.

According to preliminary figures, in the second quarter of 2022, Colombia registered a current account deficit of US$4,858 million, 20% higher than the deficit in the same period of 2021. In the third quarter of 2022, Colombia registered a current account deficit of US$6,177 million, 27% higher than the deficit in the same period of 2021. According to preliminary figures, total foreign investment registered a deficit of US$3,071 million in the third quarter of 2022, compared to a deficit of US$2,528 million in the same period of 2021. Net direct investment increased to US$3,317 million and net portfolio investment increased to US$2,584 million during the third quarter of 2022.

According to preliminary figures, in the third quarter of 2022, net acquisition of financial assets decreased to US$397 million and the net incurrence of liabilities decreased to US$644 million compared to the same period of 2021.

Geographic Distribution of Trade

The following tables show the destination and origin, respectively, of Colombia’s exports and imports for the periods indicated.

Merchandise Exports to Major Trading Partners

 

		2017				2018				2019(1)				2020(1)				2021(1)				As of November 30, 2022(1)
United States			27.9	%			25.5	%			29.2	%			28.7	%			26.5	%			25.8	%
Venezuela			0.8	%			0.8	%			0.5	%			0.6	%			0.8	%			1.1	%
China			5.8	%			10.0	%			11.6	%			8.9	%			8.8	%			4.0	%
Netherlands			4.1	%			2.5	%			3.1	%			2.3	%			2.4	%			4.7	%
Ecuador			3.9	%			4.4	%			4.9	%			4.7	%			4.2	%			3.3	%
Panama			6.5	%			7.0	%			6.0	%			4.6	%			5.8	%			10.3	%
Spain			2.6	%			2.8	%			1.3	%			1.6	%			1.7	%			2.5	%
Chile			2.7	%			2.8	%			2.5	%			2.5	%			2.6	%			2.8	%
Peru			3.0	%			2.8	%			2.9	%			2.8	%			2.6	%			1.9	%
Brazil			3.6	%			3.7	%			3.7	%			4.1	%			5.0	%			4.1	%
India			0.7	%			1.3	%			0.9	%			2.6	%			5.4	%			4.5	%
United Kingdom			1.1	%			1.0	%			1.2	%			1.2	%			1.1	%			1.1	%
Switzerland			0.9	%			0.8	%			0.4	%			0.4	%			0.4	%			0.2	%
Others			36.4	%			34.5	%			31.9	%			35.0	%			32.7	%			33.8	%
Total			100.0	%			100.0	%			100.0	%			100.0	%			100.0	%			100.0	%

 

Totals may differ due to rounding.

 

(1)	Preliminary.

Sources: DANE and National Directorate of Customs and Taxes.

 

6

Merchandise Imports by Major Trading Partners⁽¹⁾

 

		2017(2) (3)				2018(2) (3)				2019(2) (3)				2020(2) (3)				2021(2) (3)				As of November 30, 2022(2)
United States			26.0	%			25.2	%			25.1	%			24.1	%			23.6	%			25.5	%
Mexico			7.6	%			7.8	%			7.5	%			6.9	%			6.5	%			5.5	%
China			18.9	%			20.6	%			20.8	%			23.8	%			23.1	%			23.1	%
Panama			0.1	%			0.1	%			0.1	%			0.1	%			0.1	%			0.1	%
Switzerland			0.9	%			0.9	%			0.9	%			0.9	%			0.7	%			0.5	%
South Korea			1.7	%			1.6	%			1.3	%			1.5	%			1.5	%			1.3	%
Germany			4.1	%			4.3	%			4.2	%			3.8	%			3.5	%			3.1	%
Brazil			5.0	%			5.5	%			6.0	%			5.7	%			5.7	%			6.8	%
Chile			1.5	%			1.4	%			1.2	%			1.4	%			1.2	%			1.3	%
Japan			2.7	%			2.5	%			2.3	%			2.0	%			2.1	%			1.8	%
Spain			2.1	%			1.9	%			1.9	%			1.8	%			2.1	%			1.9	%
Uruguay			0.1	%			0.1	%			0.1	%			0.2	%			0.1	%			0.1	%
Ecuador			1.6	%			1.6	%			1.6	%			1.9	%			1.4	%			1.3	%
Others			27.8	%			26.4	%			26.9	%			26.0	%			28.2	%			27.7	%
Total			100.0	%			100.0	%			100.0	%			100.0	%			100.0	%			100.0	%

Totals may differ due to rounding.

 

(1)	Correspond to country of purchase.

 

(2)	Preliminary

 

(3)	Annual variation according to dollar amounts (FOB).

Sources: DANE and National Directorate of Customs and Taxes.

 

7

During the eleven-month period ended November 30, 2022, Colombia’s three major import partners (CIF) were the United States, China and Brazil, representing 25.5%, 23.1% and 6.8% of Colombia’s total imports during such period, respectively.

During the eleven-month period ended November 30, 2022, Colombia’s three major export partners (FOB) were the United States, Panama and Netherlands, representing 25.8%, 10.3% and 4.7% of Colombia’s total exports during such period, respectively.

As of January 19, 2023, Colombia did not have any trade agreements with Russia.

Monetary System

Interest Rates and Inflation

On September 30, 2022, Banco de la República increased the discount rate by 100 basis points to 10.00% due to inflation expectations for 2022.

On October 31, 2022, Banco de la República increased the discount rate by additional 100 basis points to 11.00% due to inflation expectations for 2022.

On December 19, 2022, Banco de la República increased the discount rate by additional 100 basis points to 12.00% due to inflation expectations for 2022.

The 12-month change in Consumer Price Index (“CPI”) as of December 31, 2022, was 13.1%.

As of December 31, 2022, the year-over-year Producer Price Index (“PPI”) increased by an estimated 21.8%, mainly due to increases in prices of mining (29.3%) and agriculture, livestock and fishing (33.5%) and of industrial prices (16.3%).

As of January 16, 2023, the Fixed Term Deposit rate (“DTF”) was 13.6%.

The following table shows changes in the CPI and the PPI and average 90-day deposit rates for the periods indicated.

Inflation and Interest Rates

 

Period		Consumer Price Index (CPI)(1)				Producer Price Index (PPI)(1)				Short-Term Reference Rate (DTF)(2)
2022
January			6.9				29.4				3.5
February			8.0				31.1				4.3
March			8.5				33.8				5.0
April			9.2				34.3				6.0
May			9.1				34.6				7.0
June			9.7				31.6				7.7
July			10.2				33.0				9.3
August			10.8				29.1				10.6
September			11.4				27.3				11.0
October			12.2				26.4				11.6
November			12.5				24.5				12.6
December			13.1				21.8				13.4

 

8

(1)	Percentage change over the previous 12 months at the end of each month indicated.

 

(2)	Average for each indicated month in 2022, year-on-year of the DTF, as calculated by the Financial Superintendency.

Sources: DANE and Banco de la República.

Foreign Exchange Rates and International Reserves

Exchange Rates

The following table shows the average and end-of-period peso/dollar exchange rates and the real exchange rate index for the dates and periods indicated.

Exchange Rates

 

Year		Average(1)				End-of- period				Real Exchange Rate Index(2)(3) Average
		(pesos per U.S. dollar)								(Avg. 2010=100)
2022
January			4,000.72				3,982.60				158.28
February			3,938.36				3,910.64				155.70
March			3,805.52				3,748.15				155.04
April			3,796.39				3,966.27				154.40
May			4,027.60				3,912.34				151.16
June			3,922.50				4,127.47				150.95
July			4,394.01				4,300.30				147.20
August			4,326.77				4,400.16				146.28
September			4,437.31				4,532.07				142.92
October			4,714.96				4,819.42				140.46
November			4,922.30				4,809.51				141.15
December			4,787.89				4,810.20

 

(1)	Representative market rate as calculated by the Financial Superintendency.

 

(2)

Colombian Peso Real Exchange Rate Index “1”: Based on the producer price index for non-traditional goods in global trade. The real exchange rate index is calculated by adjusting the nominal exchange rate by the producer price index of Colombia’s trading partners and the domestic producer price index. Yearly data corresponds to December of each year. From May 2015, the Real Exchange Rate Index base is 2010. Producer price index figures used in calculating Colombian Peso Real Exchange Rate Index for 2015 use the new methodology described above.

 

(3)	The Real Exchange Rate Index figures for 2022 are preliminary.

Source: Superintendencia Financiera, Banco de la República.

 

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International Reserves

As of December 31, 2022, gross international reserves decreased by US$1,297.7 million to US$57,290.1 million, compared to December 2021.

As of January 19, 2023, the General Directorate of Public Credit and National Treasury had no current position in swaps and forward contracts over foreign exchange.

Public Sector Finance

2023 Budget

On July 29, 2022, the Ministry of Finance presented to the Congress the draft General Budget of the Nation for 2023 (the “2023 Budget”) amounting to Ps. 391.4 trillion, an 11% increase over the 2021 budget.

On September 21, 2022, the joint Senate and Chamber Economic Commission approved the draft 2023 Budget in the first debate, with an addition of Ps.14.1 trillion for a total amount of Ps. 405.6 trillion.

On October 18, 2022, Congress approved the 2023 Budget for the fiscal period from January 1, 2023, to December 31, 2023, for Ps. 405.6 trillion. The 2023 Budget will allow expanding investment in infrastructure and in social spending in all departments. The 2023 Budget has as its purpose social equity and equitable distribution throughout the country. According to the Minister of Finance and Public Credit, the 2023 Budget represents 27.7% of GDP and an increase of 15.1% compared to the previous year. According to the 2023 Budget, Ps. 253.6 trillion will be allocated for operations; Ps. 77.9 trillion for debt service, and Ps. 74.0 trillion for investment. The sectors with the highest allocations are education (Ps. 54.8 trillion); health and social protection (Ps. 50.2 trillion); Ministry of Finance and Public Credit (Ps. 48.7 trillion); defense and police (Ps. 48.3 trillion); labor, (Ps. 37.9 trillion) and social inclusion and reconciliation (Ps. 17.8 trillion).

On November 29, 2022, President Petro enacted the 2023 Budget as Law No. 2276 of 2022.

On December 22, 2022, the Ministry of Finance presented Colombia’s updated Financing Plan for the years 2022 and 2023. The updated Financing Plan projects a fiscal deficit of 5.5% of GDP for 2022, which reflects a 1.6% decrease from the fiscal deficit of 7.1% of GDP in 2021. Additionally, the updated Financing Plan for 2022 contemplates funding sources totaling Ps. 123.6 billion, internal disbursements of Ps. 40.9 billion and external disbursements of Ps. 22.1 billion.

The updated Financing Plan projects a fiscal deficit of 3.8% of GDP in 2023, the largest single-year deficit reduction since 1993, in part due to assumptions of higher fiscal revenue as a result of the recently enacted tax reform. Additionally, the updated Financing Plan for 2023 contemplates internal disbursements of Ps. 36.2 billion and external disbursements of Ps. 24.3 billion.

The updated Financing Plan projects that the FEPC will register a deficit of 0.1% of GDP in 2023 and then surpluses of 1.1% of GDP and 0.5% of GDP in 2024 and 2025, respectively, due to the lower compensation differentials of 0.6% of GDP and 0.1% of GDP expected in 2024 and 2025, respectively. The Government expects to make transfers to the fund of 1.7% of GDP and 0.5% of GDP in 2024 and 2025, respectively.

Public Sector Debt

In the first half of 2022, Central Government gross debt totaled Ps. 795,721 billion, equivalent to 58.4% of GDP, of which internal debt totaled Ps. 493,710 billion (36.3% of GDP) and external debt totaled Ps. 302,011 billion (22.2% of GDP). In the first half of 2022, net debt of the Central Government totaled Ps. 759,676 billion, equivalent to 55.8% of GDP, of which internal debt totaled Ps. 461,694 billion (33.9% of GDP) and external debt totaled Ps. 297,982 billion (21.9% of GDP).

 

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Public Sector Internal Debt

As of November 30, 2022, the Central Government’s total direct internal funded debt (with an original maturity of more than one year) was Ps. 504.8 trillion, compared to Ps. 441.5 trillion as of November 30, 2021.

 

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The following table shows the direct internal funded debt of the Central Government as of November 30, 2022, by type:

Central Government: Internal Public Funded Debt - Direct Funded Debt

(In millions of Ps.)

 

		As of November 30, 2021				As of September 30, 2022
		(In million COP)				(In million COP)
Treasury Bonds			Ps. 384,594,247				Ps. 440,245,107
Treasury Bonds (short term)			14,402,498				12,355,069
Pension Bonds			6,817,133				6,166,220
Peace Bonds			825				771
Constant Value Bonds			1,093,871				946,591
Others(1)			1,903,411				1,930,573
Security Bonds			1				1
Treasury notes			22,911,214				33,386,341
Solidarity notes			9,741,703				9,741,703
Total			441,464,904				504,772,376

Total may differ due to rounding.

 

(1)	Includes other assumed debt.

Source: Deputy Directorate of Risk - Ministry of Finance.

Total direct internal floating debt (i.e., short-term debt with an original maturity of one year or less) of the Central Government totaled Ps. 69.7 billion as of December 31, 2022.

Public Sector External Debt

The following tables show the total external funded debt of the public sector (with an original maturity of more than one year) by type and by creditor:

Public Sector External Funded Debt by Type⁽¹⁾

 

		As of November 30, 2021				As of November 30, 2022
Central Government		U.S. $	71,461			U.S. $	73,785
Public Entities(2)
Guaranteed			1,499				1,378
Non-Guaranteed			25,529				24,265
Total External Funded Debt		U.S. $	98,490			U.S. $	99,427

 

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(1)	Provisional; subject to revision. Includes debt with an original maturity of more than one year. Debt in currencies other than U.S. dollars has been converted into U.S. dollars using exchange rates as of November 30, 2021, and November 30, 2022, respectively.

 

(2)	Includes Banco de la República, public agencies and entities, departments and municipal governments and state-owned financial entities.

Source: Debt Database - Ministry of Finance.

Public Sector External Funded Debt by Creditor⁽¹⁾

 

		As of November, 30, 2021				As of November 30, 2022
		(In millions of U.S. dollars)
Multilaterals		U.S. $	31,542			U.S. $	33,775
IDB			10,313				11,404
World Bank			12,973				13,997
Others			8,257				8,374
Commercial Banks			6,248				6,347
Export Credit Institutions			3,199				2,695
Bonds			52,417				51,447
Foreign Governments			5,080				5,164
Suppliers			2				0
Total		U.S. $	98,490			U.S. $	99,427

Total may differ due to rounding.

 

(1)	Provisional; subject to revision. Debt with an original maturity of more than one year. Debt in currencies other than U.S. dollars has been converted into U.S. dollars using exchange rates as of November 30, 2021, and November 30, 2022, respectively.

Source: Debt Registry Office Ministry of Finance.

 

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