June 5, 2020 / 5:18 PM / a month ago

UPDATE 2-Colombia sees national income falling by $6.6 bln this year

(Adds details about TES bonds)

By Carlos Vargas and Nelson Bocanegra

BOGOTA, June 5 (Reuters) - Colombia’s government estimated national income could fall by 23.7 trillion pesos ($6.58 billion) this year, as the coronavirus lockdown and low oil prices batter the Andean country’s economy.

The country could issue international and local bonds or use an available line of credit with the International Monetary Fund to help make up for lost income, the government said in a Thursday decree published on Friday.

“Those resources will be monetized to settle the lack of cash flow in pesos,” the decree said.

Income will fall because the months-long coronavirus quarantine halted much of the economy, the decree said. Though many sectors are gradually reopening, tax collection - especially sales tax - is expected to take a significant hit.

The Finance Ministry has estimated the economy will contract by some 5.5% this year.

Colombia could more than make up for the fall, raising some 23.85 trillion pesos from a variety of sources, the decree said.

Some 15.54 trillion pesos can be raised via international bond issues, the decree said, another 2.64 trillion pesos via issues of so-called TES local bonds and 124 billion pesos from funds from natural gas.

Other sources could provide the remaining 5.54 trillion pesos. Last month the IMF approved a two-year flexible credit line of about $10.8 billion for Colombia, replacing an expiring facility.

Bancolombia, CitiBank and BBVA will structure an issue of 30-year TES, director of public credit Cesar Arias said, adding the government hopes to raise at least 2 trillion pesos with the paper.

“We want to focus on launching the first 30-year Colombian TES bond, with a mind to expand those obligations with time and seek the best possible rates,” Arias said in a statement on Friday.

Colombia issued $2.5 billion in 2031 and 2051 international bonds on Monday, after receiving interest for $13.3 billion. (Reporting by Carlos Vargas and Nelson Bocanegra Writing by Julia Symmes Cobb Editing by Richard Chang and Leslie Adler)

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