Sunrise Over El Dorado : Alianza : January 11th 2019

DAILY THOUGHT : South Ossetia is a country that rarely figures in the headlines especially in Colombia, but when you are short of numbers for your inaugeration party what better than to invite along one of President Putin's allies...it is fair to say yesterday's event in Caracas was short on celebrity power. Maduro himself had little new to say beyind the fact he was ligitimately elected but he did invite President Duque for a sit down to discuss cross-border issues especially the narcotics business whilst making it clear that Venezuela has NO such connections with that particular sector.....hmmmm.

The COLCAP was up once again, this time by 0.47% to 1384.07pts - volume was down slightly at USD 36mn, amidst this ECOPETROL (USD 7.5mn), PFBCOLOM (USD 7mn) and BCOLOM (USD 6mn) featured heavily. In terms of performance moving up the ladder were PFAVAL (+3.88%) ,PFDAVVNDA (+1.75%) and EXITO (+1.41%) whilst slipping down the snake we found CONCONCRETO (-3.14%) ,PFCEMARGOS (-2.14%) and CNEC (-0.99%). The Peso eased back back almost directly in line with the oil price, nothing dramatic especially when compared with recent gains - the currency closed at 3137 which was a decline of 0.27%, volume was USD1bn.

The bond market saw considerable slippage versus recent sessions with the benchmark 2024 up 5.5bps at 6.14% and the 2032 down 5.4bps to 7.14%. *As expected the first local bond auction of 2019 took place with the Government selling COP750bn (USD240mn) of the new October 2034 bond at a yield of 7.18% *

BONDS 2018 FINAL SCORE

Sticking with the TES bond market the final numbers are in for 2018 and we find that due to net purchases of COP10.7bn (USD3.34bn) the local AFPs have retaken their position as number one holders of local bonds with COP77.9bn in total or 26.5% of the total market of COP293bn. They shade out the foreigners by COP0.5bn who at the end of 2017 were at the top of the tree however as of December 31st the roles were reversed. In terms of the foreigners this was the second consecutive year of declines in terms of Net Purchases although given the sentiment during 2018 the YoY decline can be considered as only a modest one although we are a long below the numbers of 2014 and 2016,the latter driven by the JPM overweight recommendation which was followed so carefully.

An excuse to get the tax logo out of the box as the DIAN reported the final collection data for 2018 and in comparison with where we were earlier in the year behind the run-rate the final figure is more than acceptable. The total collected was COP144.4bn which represents a 6% increase YoY and is also 101.8% of budget with COP2.6bn more than expected in 2019. In terms of 'economic activity' which accounts for 84% of the total that area was up 5.5% at COP121.3bn whilst the overseas area, presumably there was an oil effect, was up 8.4% at COP23.1bn. Of course according to the Government this will not be enough to cover the costs for 2019 when the well discussed reform comes into effect.

In the annual survey by Ipsos the public have been asked their opinion of the nation's infrastructure and the results are arguably better than the authorities deserve in some cases but overall fully 68% stated that the Government is not doing enough versus the 73% who say that money invested on such projects is well spent. As we can see below both Digital Services and Airports poll well which is remarkable given the amount of 4G or even 3G black-spots for cellphones and doubtless every airline in Colombia would dispute the 73% reading for their infrastructure development. Energy generation where Colombia has been so successful in driving hydro-electric services forward polls a surprisingly low 42% and one wonders if that has been affected by the debacle at Hydroituango led by EPM, the headlines have continued into 2019 and few if any have been favourable. In terms of roads where the 4G projects are going to be key to the country's future economic development the highways and secondary roads poll 42% & 40% respectively which except for a few exceptions around the country seems generous. Fortunately given the structure of the 4G funding 54% of those polled have no issue with foreign money helping with the various infrastructure build-out.