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Colombia this week will surpass 20 million Covid-19 vaccinations -- and seems likely to surpass its goal of 25 million by end-July, according to latest Health Ministry forecasts.

Meanwhile, more than 1.25 million employees of nearly 6,000 private companies nationally this week are starting to get free Covid-19 shots thanks to massive investments by member-companies of Colombia’s biggest industrial-commercial trade association, ANDI (founded in Medellin).

“This is the most robust public-private alliance that has been achieved in the history of Colombia, where the national government made available its entire mechanism for the acquisition of vaccines, and companies are investing more than COP$285 billion (US$74.6 million) to reach Colombian workers and households,” ANDI President Bruce MacMaster explained.

In Antioquia, more than 150,000 workers at more than 450 member companies of ANDI are already lined-up for free, employer-paid vaccinations, according to ANDI-Antioquia director Alejandro Olaya. Among the first getting vaccinations: workers at Medellin-based utilities giant EPM, banking giant Bancolombia and clothing manufacturer Offcors, among many others.

Antioquian companies have already invested COP$40 billion (US$10.5 million) in free Covid-19 vaccines for their employees and their families, with each shot costing about COP$220,700 (US$58), including costs of Bogota-to-Medellin air transport, vaccine refrigeration and local distribution, Olaya added.

Beyond the new, private-sector vaccinations, Antioquia alone has already exceeded 2.9 million public vaccinations as of July 5, with Medellin accounting for 1.4 million of those doses.

Colombia has now moved into phase-four of its national public-vaccination campaign, offering free shots to people between 40 and 44 years old – having already vaccinated most people 45 years and older, including crucial cohorts such as front-line health workers, public safety workers and – in the next few days – the completion of vaccinations for the entire cohort of school teachers, as Colombia reopens in-person schooling July 15.


Wall Street bond rater Fitch Ratings announced July 20 that it has added Medellin-based multinational financial/insurance giant Grupo Sura and banking giant Bancolombia to a growing list of Colombian companies and municipalities suffering debt-ratings downgrades because of Colombia-wide economic problems resulting from the Covid-19 crisis.

"This decision on the part of Fitch Ratings follows a review of the average credit quality of the company's portfolio and the transitory effects that the pandemic has had on the stream of dividends obtained from its investments in the financial and related services industry," including the Suramericana insurance division and the Sura Asset Management division with its pension, savings, investment and asset management subsidiaries, Sura explained.

The credit downgrade "is supplemented by [Grupo Sura's] interests as the main noncontrolling shareholder of Bancolombia," the company added, noting that Fitch has cut Bancolombia's long-term international rating to "BB+" with a "stable" outlook.

These downgrades were a "consequence of Colombia's sovereign rating being downgraded from “BBB -to “BB +” and its effect on the country's leading bank and other financial entities," Sura noted.

 Earlier, Fitch announced a downgrading of the debt ratings of Medellin-based utilities giant EPM to "BB+" from "BBB-" and maintained its "Negative Rating Watch." 

"EPM's ratings reflect strong ownership and control by its owner, the City of Medellin ('BB+'/Stable), which was downgraded to 'BB+'/Stable from 'BBB-'/Negative," according to Fitch. "The company's business risk is low resulting from its diversification and characteristics as a utility service provider. The company's ratings also reflect its somewhat aggressive growth strategy and solid credit protection measures supported by moderate projected leverage, healthy interest coverage and an adequate liquidity position.

"EPM's Negative Watch reflects continued uncertainty regarding the closure of Hidroituango's blocked Auxiliary Diversion System since April 28, 2018, and final cost over-runs of the [US$5 billion Hidroituango hydroelectric] project," according to Fitch. "The possibility of major flooding downstream from the project exists until the diversion tunnel is closed. While the likelihood of this is remote, the environmental, financial and reputational damage to the company could be significant. Fitch's expectation is that 300-MW of the project will be online by mid-2022." 

The downgrading of EPM debt came on the heels of Fitch's similar rating cuts for Medellin-based electric-power giants ISA and Isagen as well as Medellin-based telecom-internet giant UNE-EPM (aka “Tigo-Une”), plus the city of Medellin's municipal bonds.

The corporate and municipal debt-rating cuts follow on the heels of downgrades to Colombia’s sovereign debt -- all caused by the Covid-19 crisis that triggered a huge decline in the national economy and employment, slashed tax receipts and forced massive government subsidies aiming to help the poor and working classes deal with the crisis.

Colombia’s national government had tried in early April to address this huge fiscal imbalance with a proposed tax hike on wealthier individuals and corporations.

But a clientelist-oriented Congress, which routinely hands out tax breaks to various interests in exchange for campaign contributions (as in all democratic nations) -- and left-wing politicians who cynically stoked violent protests in May and June -- weeks after the government had already discarded the tax proposal – have left the President Ivan Duque administration now trying to bring forth revised fiscal legislation, with a proposal due July 20, but carrying uncertain prospects.

Also hit by the new Wall Street debt-ratings-cuts are Colombia’s mostly stated-owned oil company Ecopetrol and its pipeline affiliate Ocensa, according to Fitch.

“The downgrade of Isagen’s and Tigo-UNE’s FC-IDRs [foreign currency issuer default ratings] reflects the cap imposed by the country ceiling of Colombia ('BBB-'), as these companies do not have substantial assets, offshore credit facilities, or cash held or generated abroad to reduce transfer and convertibility risk,” according to Fitch.

However, Fitch affirmed Isagen’s and UNE-EPM’s local currency IDRs, “which remain one notch above Colombia’s country ceiling,” according to the company.

“The downgrade of ISA’s FC and LC IDRs reflect its linkage with the Republic of Colombia, which owns 51.4% of the company. Fitch considers ISA’s two-notch differential above its parent appropriate.”

The main reason for the downgrades “reflects the deterioration of public finances with large fiscal deficits in 2020-2022, a rising government debt level, and reduced confidence around the capacity of the government to credibly place debt on a downward path in the coming years,” according to Fitch.

“Colombia’s gross general government debt-to-GDP is forecast to reach 60.8% in 2021, more than double the 30% level when Fitch upgraded Colombia back to the 'BBB' category in 2011.

“Fitch expects debt to continue to rise through 2022 and does not expect significant debt reduction over the medium term, leaving Colombia vulnerable to shocks. Fitch sees significant risks to the government’s fiscal consolidation plan, given the reliance on tax administration efforts and divestments, as well as the uncertainty of the impact of the pending tax reform,” the ratings agency added.


Wall Street bond rater Fitch Ratings announced last night (July 1) that it has downgraded Colombia’s “Long-Term Foreign-Currency” (LTFC) and local currency “Issuer Default Ratings (IDR)” to ‘BB+’ from ‘'BBB-,’' but Colombia’s debt outlook is now revised to “stable,” up from the prior rating of “negative.”

“The [LTFC] downgrade reflects the deterioration of the public finances with large fiscal deficits in 2020-2022, a rising government debt level, and reduced confidence around the capacity of the government to credibly place debt on a downward path in the coming years,” according to Fitch.

“Colombia’s gross general government debt (GGGD) to GDP is forecast to reach 60.8% in 2021, more than double the 30% level when Fitch upgraded Colombia back to the ‘'BBB’ category in 2011.

“Fitch expects debt to continue to rise through 2022 and does not expect significant debt reduction over the medium term, leaving Colombia vulnerable to shocks. Furthermore, Fitch sees significant risks to the government’s fiscal consolidation plan, given the reliance on tax administration efforts and divestments, as well as the uncertainty of the impact of the pending tax reform,” the bond rater added.

The Covid-19 pandemic caused a 6.8% GDP contraction in 2020, caused the government debt-to-GDP ratio to hit 58.3%, up from 44.7% in 2019. “Fitch now expects government debt to GDP to continue to rise over the forecast period to 64.4% of GDP by 2023,” the analyst added.

While the Covid crisis caused a big jump in unemployment along with contractions in GDP, private-sector income and government tax revenues, “the pace of [Covid-19] vaccinations is now picking up, with around 23% of the population receiving a least one jab according to Our World in Data, and unemployment has fallen to 15% as some of the hardest hit parts of the economy begin to reopen,” Fitch noted.

Following a failed tax proposal in April that aimed to tax wealthier people and corporations in order shore-up government finances and extend benefits to Colombia’s poorest populations, “Fitch expects the government to reintroduce a revised tax reform package in July 2021 when the new session of Congress commences, and is targeting a benefit of around 1.2% of GDP on a net basis,” the analyst noted.

“However, Fitch believes that the majority of the fiscal benefit will be obtained only in 2023 --given reliance on corporate income tax measures -- while the government extends some pandemic related spending such as cash transfers into 2022,” the analyst added.

However, “the passage of any reforms will be difficult to achieve given the growing social pressures, the government’s low popularity and the upcoming elections, with congressional and presidential elections scheduled for March 2022 and May 2022 respectively,” Fitch noted.

Combined with further extension of government subsidies to the poor, “Fitch forecasts central government deficits of 8.2% in 2021 and 6.9% of GDP in 2022,” up from lower amounts in the last decade, the analyst added.

If the government succeeds in selling some state assets, then fiscal deficits could be reduced, Fitch added.

In addition, “the government has outlined an updated fiscal rule to be presented with its new tax reform proposal that will include a debt anchor of 55% of GDP with a limit of around 70% of GDP,” Fitch noted.

On a positive note, “Fitch has raised its GDP growth forecast to 6.3% in 2021, up from Fitch’s previous forecast of 4.9%. Fitch sees some upside to even the revised forecast if the Coronavirus pandemic outlook improves and social protests remain subdued, albeit there is a greater than usual degree of uncertainty surrounding forecasts,” the company added.

Inflation expectations likewise look good, Fitch added.

Meanwhile, foreign direct investment (FDI) “historically has covered around 70% of the current account deficit (CAD) and Fitch expects the favorable financing of the CAD to continue during the forecast period,” the analyst found.

On another positive front, “Colombia’s external liquidity has improved markedly over the last three years as a result of the central bank’s international reserve accumulation policy,” according to Fitch.

“International reserves rose to US$58.5 billion at year-end 2020, up significantly from US$52.7 billion in 2019. As a result, Fitch’s external liquidity ratio rose to 108% in 2021 from 89% in 2019. Additionally, Colombia maintains access to a flexible credit line with the International Monetary Fund for US$12.2 billion (out of a total program of US$17.6 billion),” the analyst concluded.


Colombia’s infrastructure agency (Agencia Nacional de Infraestructura, ANI) announced today (June 30) that the “Magdalena 2” project linking Medellin northward to the “Ruta del Sol” highways just won a COP$2.8 trillion (US$740 million) loan deal organized by Colombian coordinator Financiero de Desarollo Nacional (FDN).

The loan deal for ANI’s “Magdalena 2” concession “guarantees continuation of the execution of highway construction works that connect the Antioqueño municipality of Remedios with the Puerto Berrío bypass connector and then onward to the ‘Ruta del Sol’ highways at Cimitarra, Santander,” which will speed freight traffic to-and-from Cartagena and northern ports on the Caribbean.

FDN’s organization of the loan package involves U.S.-based Goldman Sachs, Spain’s Banco Santander, Bancolombia, Japan’s Sumitomo Mitsui, the Bank Credit Institute of Spain (ICO), France’s Credit Agricole Corporate and Investment Banking, Banco de Credito del Peru (BCP), Germany’s Siemens Financial Services and CAF-AM Ashmore.

“The financing is made up of three tranches that include a local loan in Colombian pesos, a loan in U.S. dollars and a bond issue governed under U.S. regulation. The sum of these three tranches guarantees all the resources for this financial closing,” according to ANI.

This “fourth generation” (4G) project includes 144 kilometers of new highway and a nearly complete, 1.36-kilometers-long bridge over the Magdalena River.

“It is expected that ‘functional unit four’ of the project -- linking the Puerto Berrío bypass with Cimitarra thus connecting the departments of Antioquia and Santander -- will come into operation in the second half of 2021, while by 2023 the construction phase will be completed for the entire corridor,” according to ANI.


Colombia Health Minister Fernando Ruiz announced today (June 30) that because of acceleration in Covid-19 vaccination rates, Colombia is likely to achieve its stated goal of having its 35 million most-vulnerable-people fully vaccinated by December 2021.

“We see an important growth in daily vaccinations, having started with an average of less than 50,000 per day but currently we are vaccinating more than 300,000 people daily, which gives us a vaccination rate enabling us to close this process in December 2021 with 35 million vaccinated,” Ruiz stated.

Deputy Health Minister Luis Alexander Moscoso added that thanks to growing international deliveries of vaccines, Colombia is exceeding its goal of delivering more than 1 million doses each week to cities, towns and territories throughout the country.

As of June 28, 17,570,929 doses had already been applied nationally, of which 6,331,714 correspond to second doses and 51,708 to single doses (the latter being the single-shot Janssen vaccine).

Meanwhile, Colombia has already received 24.8 million doses of vaccines from various manufacturers -- including 1.5 million doses just-now being provided this week to scores of private companies giving vaccinations to millions of their workers and families.

By September, 35 million Colombians will have received at least their first dose, with the remainder of vaccinations coming during the fourth quarter, according to Minister Ruizr.

Coverage with the first dose is already at 89% in people over 80 years of age; 79% in the 75-79 group; 77% in the 70-74 group; 73% for 65-69 year-olds; 67% for 60-64 years; 54% for 55-59 years; 44% for 50-54 years; and 9.5% in the just-opened 45-49 year-old-group. Front-line health workers are now 100% vaccinated, he added.

“Colombia is today the fourth country in Latin America in the number of vaccines applied and the second in speed of application since the beginning of the different programs. We will close June with more than 26 million vaccines received, not counting possible donations, making us the third biggest vaccinator in Latin America and with 4-million-more-people than we had earlier projected,” he added.

 


Netherlands-based multinational paints-and-chemicals giant AkzoNobel announced June 29 that it just inked a deal to acquire Medellin-based multinational paints, piping and hardware giant Grupo Orbis.

Deal completion “is subject to regulatory approvals and is expected by end of this year or in early 2022” -- but financial details have yet to be disclosed, according to AkzoNobel.

Grupo Orbis operates in 10 countries in South America, Central America and the Caribbean, with 2020 reported revenue of COP$1.2 trillion (US$320 million).

“The transaction includes the 'Pintuco' paints and coatings business, 'Andercol' and 'Poliquim' (resins) and 'Mundial' (hardware distribution and services),” according to AkzoNobel.

The new deal “will expand our long-term position across South America by establishing us as a frontrunner in the Andean region and in Central America, where several countries are high on the global growth rankings for the next decade,” added AkzoNobel CEO Thierry Vanlancker.

The Grupo Orbis deal “follows-on from a series of recent acquisitions by AkzoNobel across the paints and coatings industry over the last 18 months, which have included Titan Paints in Spain and New Nautical Coatings in the U.S.,” according to AkzoNobel.

Following the new deal, AkzoNobel as a result will be operating in more-than 150 countries, with more-than 33,000 employees.

 


Sura to Manufacture Covid-19 Vaccines by 2023

Wednesday, 30 June 2021 11:36 Written by

Medellin-based multinational health-care and insurance giant Grupo Sura announced June 29 that it’s investing US$54 million in biotech researcher VaxThera in a project aiming to produce Covid-19 vaccines in Colombia by 2023.

“VaxThera advances the development of vaccines such as Coronavirus, dengue, Chikungunya, yellow fever, influenza and Zika,” according to Sura.

A new, 35,000 square meters manufacturing plant here -- capable of producing 100 million annual doses -- “will have the highest technological standards and human talent, where it will generate around 500 jobs at all levels of specialty,” according to Seguros Sura Colombia.

“In addition, the company will be able to implement processes such as fill-and-finish -- the process of filling and packaging vials with biologicals,” according to Sura.

The new project will be led by University of Wisconsin professor Jorge Emilio Osorio Benítez, who has more than 30 years of experience in the research and development of vaccines, according to Sura.

“VaxThera will allow the importation and commercialization of vaccines and other types of biologicals for Colombia and Latin America, as well as transferring the necessary technology to Colombia to produce and develop these types of products,” according to Sura.

Currently, VaxThera “is developing a universal vaccine against Coronavirus, which is in the pre-clinical testing phase in Wisconsin, and is expected to be ready by 2023. This will serve as a booster vaccine, which will facilitate procurement and distribution processes.”

In the meantime, “progress will be made in importing various types of vaccines necessary in the [Latin American] region -- together with strategic allies -- both for Coronavirus and for other types of tropical diseases,” according to the company.

“For VaxThera it is important to build a path that turns Colombia into a country capable of developing, managing and positioning vaccines from early stages to their final development, so as not to be dependent on imports,” added Osorio.


Colombia Health Minister Fernando Ruiz announced this morning (June 24) that Colombia has now exceeded 16 million Covid-19 vaccinations -- and is averaging close to 300,000 daily, making its 17-million total-vaccinations-target by end-June likely a certainty.

Of those 16 million nationwide vaccinations, 5.4 million are second shots – as required by almost all the approved Covid-19 pharmaceuticals except for the Janssen/Johnson & Johnson single-shot vaccine, according to the Health Ministry.

The first-ever batch of 480,000 Janssen Covid-19 vaccines just arrived yesterday in Colombia – targeted for remote towns and rural areas in Colombia where ultra-cold storage and two-shot regimens as required by the other pharmaceuticals are problematic, the Ministry noted.

Colombia has already received more than 20 million doses of various Covid-19 vaccines, with another 1.5 million due this weekend, according to the Health Ministry.

Meanwhile, Antioquia has surpassed 2.4 million vaccination shots -- and Medellin is now past 1.1 million, according to the latest government statistics (reports to June 23).

On another encouraging front -- starting next week -- private companies throughout Colombia will begin vaccinating millions of their employees, in parallel with all the other, existing public vaccination campaigns organized by the Health Ministry, local clinics, hospitals, municipal governments and “EPS” health-insurance networks.

Despite all this good news, the bad news is that Colombia this week just passed the 100,000-total-deaths mark since the Covid-19 pandemic started 16 months ago (in early 2020).

Covid-19 deaths nationally have been averaging close to 600 daily in the past month – an all-time record, with thousands of those deaths attributed to reckless, mass-spreader events at scores of “Comite del Paro” protest marches from late April until mid-June.

As a result of these mass-spreader events, intensive care unit (ICU) occupancy remains at a dangerously high 97% in Antioquia and at similar levels in Bogota, according to latest government statistics.


Fedesarrollo – Colombia’s leading economic think-tank – announced June 17 that it has revised upward its previous GDP (“PIB” in Spanish initials) growth forecast to 7.2% for full-year 2021, up from a prior estimate of 4.8% growth.

“The increase in the growth forecast is due to higher growth in the first quarter of this year compared to expectations -- due to the low comparison base due to the economic contraction of 6.8 % the previous year -- as well as the reopening of different sectors, the acceleration of the vaccination process and the greater prospects for global growth, which would positively impact internal and external demand,” explained Fedesarrollo director Luis Fernando Mejía.

An unexpectedly strong 1.1% GDP growth in first quarter (1Q) 2021 is now being followed by even stronger growth “in sectors such as construction (32%), entertainment activities and domestic services (23%), industry (22.5%) and trade (22.3%),” according to Colombia’s Economic Monitoring Indicator (ISE in Spanish initials).

“In the month of April [2021], the economy indicates an annual [year-on-year] growth of 25.8%, but with less dynamics compared to the production of March, as a result of the mobility restrictions in the framework of the third peak of Covid infections,” according to Fedesarrollo.

Meanwhile, the net effects of the violent national strikes and road blockades starting in late April “would be translated into a lower level of activity in May and, as of July, an increase in domestic demand would be observed as a result of the sectorial opening announced by the national government and local authorities,” according to Fedesarrollo.

“However, these very positive economic growth figures would not be immediately reflected in better labor market figures” -- as unemployment is the main cause of rioting and strikes, since the Covid-19 crisis has caused massive job losses especially among younger workers.

“There is a significant risk related to the economy having a year of exceptional economic growth without a substantial reduction in the unemployment rate,” Mejía warned. “To avoid this risk, it is essential to execute a shock plan to generate employment during the second half of the year that allows unemployment rates to be below 12% at the end of the year.”

According to Fedesarrollo, Colombia's strong growth forecast for full-year 2021 would be led by recoveries in commerce, transport and travel sectors, manufacturing industries and construction, which together would contribute 4.4 percentage points to the 7.2% GDP growth outlook.

On the other hand, “downward risks still persist, mainly due to an eventual return of protest demonstrations and roadblocks in the country, as well as eventual increases in the occupancy level of Intensive Care Units (ICU) that generate new restrictions on mobility and productive activity,” Fedesarrollo added.


Medellin-based highway construction consortium Covipacifico announced June 15 that it just won confirmation of a US$150 million financing package for its “Pacifico 1” highway project.

The financing will guarantee completion of the COP$2.6 trillion (US$704 million), 50-kilometers-long “Pacifico 1” project between the southern Medellin suburb of Caldas and a new bridge-and-tunnel connection to the nearly complete “Pacifico 2” highway above the Cauca river town of Bolombolo.

When Pacifico 1 and Pacifico 2 eventually connect to the under-construction “Pacifico 3” project in 2023, then -- at long last -- Medellin finally will have its first direct, high-speed connection all the way to the main Pacific port at Buenaventura, greatly reducing freight transport times and costs.

“Pacifico 1” is now more than 70% complete and full opening is expected by August 2023, according to Covipacifico.

According to a separate, related June 15 bulletin from Colombia’s Agencia Nacional de Infraestructura (ANI), “this new milestone in financing was supported by the international banks Sumitomo Mitsui Banking Corporation (Japan) and Santander S.A. (Spain).”

“These resources show the confidence of international banks in Colombia,” added Colombia Transport Minister Angela María Orozco. “Pacifico 1 will allow the [Medellin and southwest Antioquia] region to be better connected with the main economic centers inside and outside of Antioquia,” she added.

This month, the first 5.2 kilometers of new, four-lane divided highway opened near Bolombolo on Pacifico 1, including the new, 1.4-kilometers-long “ Sinifaná” twin tunnels.

Pacifico 1 in total includes construction of 63 bridges, three below-ground interchanges at Sinifaná, Titiribí and Camilo Cé, 32 kilometers of new, four-lane divided highway and two twin tunnels at Sinifaná (now complete) and at Amagá, the latter just-now completely excavated.


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About Medellin Herald

Medellin Herald is a locally produced, English-language news and advisory service uniquely focused upon a more-mature audience of visitors, investors, conference and trade-show attendees, property buyers, expats, retirees, volunteers and nature lovers.

U.S. native Roberto Peckham, who founded Medellin Herald in 2015, has been residing in metro Medellin since 2005 and has traveled regularly and extensively throughout Colombia since 1981.

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