Bond Colombiana 7.75% ( XS0502258444 ) in COP

Issuer Colombiana
Market price 100 %  ⇌ 
Country  Colombia
ISIN code  XS0502258444 ( in COP )
Interest rate 7.75% per year ( payment 1 time a year)
Maturity 13/04/2021 - Bond has expired



Prospectus brochure of the bond Colombia XS0502258444 in COP 7.75%, expired


Minimal amount 5 000 000 COP
Total amount 2 467 611 000 000 COP
Detailed description Colombia is a South American country boasting diverse geography, including Andes Mountains, Amazon rainforest, and Caribbean coastlines, with a rich history blending indigenous cultures, Spanish colonial influence, and vibrant modern society.

The Bond issued by Colombiana ( Colombia ) , in COP, with the ISIN code XS0502258444, pays a coupon of 7.75% per year.
The coupons are paid 1 time per year and the Bond maturity is 13/04/2021







PROSPECTUS SUPPLEMENT
(To prospectus dated April 14, 2009)
Ps. 1,528,831,000,000
Republic of Colombia
7.75% Global TES Bonds due 2021
Payable in U.S. dollars
The bonds will mature on April 14, 2021. Colombia will pay interest on the bonds on each April 14. Interest will accrue
from April 14, 2010, and the first interest payment will be made on April 14, 2011. Principal and interest will be translated
into and payment of principal and interest will be made in United States dollars.
The bonds will be direct, general, unconditional, unsecured and unsubordinated external indebtedness of Colombia and
will be backed by the full faith and credit of Colombia. The bonds will rank equal in right of payment with all of Colombia's
present and future unsecured and unsubordinated external indebtedness.
The bonds will not be redeemable before maturity and will not be entitled to the benefit of any sinking fund.
The bonds are termed "TES" bonds as a short-hand form for Títulos de Tesorería (Treasury securities).
The bonds will contain provisions regarding acceleration and future modifications to their terms that differ from those
applicable to Colombia's outstanding public external indebtedness issued prior to January 21, 2004. Under these provisions,
which are described in the sections entitled "Description of the Securities--Debt Securities--Default and Acceleration of
Maturity," "--Collective Action Securities" and "--Meetings and Amendments--Approval (Collective Action Securities)"
in the accompanying prospectus, Colombia may amend the payment provisions of the bonds with the consent of the holders
of 75% of the aggregate principal amount of the outstanding bonds.
Application has been made to list the bonds on the official list of the Luxembourg Stock Exchange and to trade them on
the Euro MTF Market of the Luxembourg Stock Exchange.
See "Risk Factors" beginning on page S-9 to read about certain risks you should consider before investing in the
bonds.
Per Bond in
Per Bond
U.S. Dollars(3)
Total
Issue Price(1)(2) ................................................................... 100.00%
U.S. $2,616.34
U.S. $799,986,918
Underwriting Discount ....................................................
0.45%
U.S. $
11.77
U.S. $ 3,599,941
Proceeds, before expenses, to Colombia..........................
99.55%
U.S. $2,604.56
U.S. $796,386,977
1:
Purchasers will make the payment of the issue price in U.S. dollars based on an exchange rate for the conversion of Colombian pesos into U.S. dollars of Ps.
1,911.07 per U.S. $1.00, which is the Representative Market Rate in effect on April 7, 2010. The minimum denomination per bond is Ps. 5,000,000 and bonds
will be issued in integral multiples of Ps. 1,000,000 in excess thereof.
2:
Purchasers will also be required to pay accrued interest, if any, from April 14, 2010, the date Colombia expects to deliver the bonds offered by this prospectus
supplement.
3:
For purposes of calculating values on a per bond basis, a face value of Ps. 5,000,000 has been assumed.
Delivery of the bonds, in book-entry form only, is expected to be made on or about April 14, 2010.
Neither the Securities and Exchange Commission, referred to as the SEC, nor any other regulatory body has approved or
disapproved of these securities or passed upon the accuracy or adequacy of this prospectus supplement or the accompanying
prospectus. Any representation to the contrary is a criminal offense.
Credit Suisse
Deutsche Bank Securities
April 7, 2010


TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
Summary .........................................................................................................................................................
S-3
The Issuer....................................................................................................................................................
S-3
The Offering ...............................................................................................................................................
S-6
Risk Factors.....................................................................................................................................................
S-9
Certain Defined Terms and Conventions.........................................................................................................
S-13
About this Prospectus Supplement ..................................................................................................................
S-14
Incorporation by Reference .............................................................................................................................
S-14
Table of References.........................................................................................................................................
S-15
Use of Proceeds ...............................................................................................................................................
S-16
Recent Developments......................................................................................................................................
S-17
Republic of Colombia.................................................................................................................................
S-17
Economy.....................................................................................................................................................
S-18
Foreign Trade and Balance of Payments ....................................................................................................
S-18
Monetary System ........................................................................................................................................
S-20
Public Sector Finance .................................................................................................................................
S-23
Public Sector Debt ......................................................................................................................................
S-25
Description of the Bonds .................................................................................................................................
S-27
General Terms of the Bonds .......................................................................................................................
S-27
Payment of Principal and Interest ...............................................................................................................
S-28
Paying Agents, Calculation Agent and Transfer Agents.............................................................................
S-29
Notices ........................................................................................................................................................
S-29
Registration and Book-Entry System..........................................................................................................
S-29
Certificated Bonds ......................................................................................................................................
S-29
Taxation...........................................................................................................................................................
S-30
Underwriting....................................................................................................................................................
S-33
General Information ........................................................................................................................................
S-35
PROSPECTUS
About This Prospectus................................................................................................................................................................ 2
Forward-Looking Statements .........................................................................................................................................................2
Use of Proceeds ..............................................................................................................................................................................2
Description of the Securities...........................................................................................................................................................2
Taxation.........................................................................................................................................................................................
1 .3
Debt Record...................................................................................................................................................................................
1 .5
Plan of Distribution ................................................................................................................................................................
15
Official Statements ................................................................................................................................................................
16
Validity of the Securities ...............................................................................................................................................................
1 .6
Authorized Representative ............................................................................................................................................................
1 .6
Where You Can Find More Information ................................................................................................................................
16
You should rely only on the information contained in or incorporated by reference in this prospectus
supplement and the accompanying prospectus. We have not authorized anyone to provide you with different
information. We are not making an offer of these securities in any state where the offer is not permitted. You should
not assume that the information contained in this prospectus supplement or the accompanying prospectus is accurate
as of any date other than the date on the front of this prospectus supplement.
S-2


SUMMARY
This summary highlights information contained elsewhere in this prospectus supplement and the accompanying
prospectus. It is not complete and may not contain all of the information that you should consider before investing in the
bonds. You should read this entire prospectus supplement and the accompanying prospectus carefully.
The Issuer
Overview
Colombia is the fourth largest country in South America, with a territory of 441,020 square miles (1,141,748 square
kilometers). Located on the northwestern corner of the South American continent, Colombia borders Panama and the
Caribbean Sea on the north, Peru and Ecuador on the south, Venezuela and Brazil on the east and the Pacific Ocean on the
west. According to the National Administrative Department of Statistics ("DANE"), Colombia's population in 2008 was
approximately 44.5 million. Approximately 7.2 million people live in the metropolitan area of Bogotá, the capital of
Colombia.
Government
Colombia is governed as a Presidential Republic. Colombia is divided into 32 departments. Each department is divided
into municipalities.
The Republic of Colombia is one of the oldest democracies in the Americas. In 1991, a popularly elected Constitutional
Assembly approved a new Constitution, replacing the Constitution of 1886. The Constitution provides for three independent
branches of government: an executive branch headed by the President; a legislative branch consisting of the bicameral
Congress, composed of the Chamber of Representatives and the Senate; and a judicial branch consisting of the Corte
Constitucional (Constitutional Court), the Corte Suprema de Justicia (Supreme Court of Justice, or "Supreme Court"), the
Consejo de Estado (Council of State), the Consejo Superior de la Judicatura (Supreme Judicial Council), the Fiscalía
General de la Nación (National Prosecutor General) and in such lower courts as may be established by law.
Under the Constitution, the President is elected by direct vote. On May 28, 2006, Alvaro Uribe was re-elected President
for the 2006-2010 term. In September 2009, both houses of Congress approved legislation calling for a national referendum
on amending the constitution to allow President Uribe to seek re-election for a third term. On February 26, 2010, the
Constitutional Court declared that legislation unconstitutional. Following that decision, former Defense Minister Juan
Manuel Santos has become the presidential candidate for President Uribe's political party, Partido Social de La Unidad
Nacional, in the upcoming presidential elections on May 30, 2010.
Judicial power is vested in the Constitutional Court, the Supreme Court, the Council of State, the Supreme Judicial
Council, the National Prosecutor General and in such lower courts as may be established by law. The function of the
Constitutional Court, whose nine members are elected by the Senate for an eight-year term, is to assure that all laws are
consistent with the Constitution and to review all decisions regarding fundamental rights. The Supreme Court is the final
appellate court for resolving civil, criminal and labor proceedings. The Council of State adjudicates all matters relating to the
exercise of public authority or actions taken by the public sector, including the review of all administrative decisions or
resolutions that are alleged to contradict the Constitution or the law. The Council of State also acts as advisor to the
Government on administrative matters. Supreme Court and Council of State justices are appointed for eight-year terms by
their predecessors from a list of candidates provided by the Supreme Judicial Council. The National Prosecutor General, who
is appointed for a four-year term by the Supreme Court from a list of three candidates submitted by the President, acts as the
nation's prosecutor. The judicial branch is independent from the executive branch with respect to judicial appointments as
well as budgetary matters.
National legislative power is vested in the Congress, which consists of a 102-member Senate and a 166-member
Chamber of Representatives. Senators and Representatives are elected by direct popular vote for terms of four years. Senators
are elected on a nonterritorial basis, while Representatives are elected on the basis of proportional, territorial representation.
In each department, legislative power is vested in departmental assemblies whose members are elected by direct popular vote.
At the municipal level, legislative power is vested in municipal councils, which preside over budgetary and administrative
matters. The most recent Congressional elections occurred on March 14, 2010, when, according to preliminary results,
candidates from Partido Social de La Unidad Nacional and Partido Conservador Colombiano won 50 of the 100 seats in the
Senate and 85 of the 166 seats in the Chamber of Representatives.
S-3


Selected Colombian Economic Indicators
2005
2006
2007
2008
2009
Domestic Economy
Real GDP Growth (percent)(1) ...........................
5.7%
6.9%
7.5%
2.4%
0.4%
Gross Fixed Investment Growth
21.2
17.2
15.2
4.7
(1.6)
(percent)(1)(2) ..................................................
Private Consumption Growth
4.7
6.8
7.6
2.5
0.1
(percent)(1)(2) ..................................................
Public Consumption Growth
6.4
4.2
4.5
1.3
2.9
(percent)(1)(2) ..................................................
Consumer Price Index(3) ................................
4.9
4.5
5.7
7.7
2.0
Producer Price Index(3) ................................
2.1
5.5
1.3
9.0
(2.2)
Interest Rate (percent)(4) ................................
7.0
6.3
8.0
9.5
6.2
Unemployment Rate (percent)(5)........................
12.0
12.8
10.2
10.9
12.3
Balance of Payments
(millions of U.S. dollars)
Exports of Goods (FOB)(6) ............................
$....
20,818
$
23,930
$
29,381
$
37,095
$
32,565
Oil and its derivatives(6) .........................
5,559
6,328
7,318
12,204
10,268
Coffee(6)...................................................
1,471
1,461
1,714
1,883
1,543
Imports of Goods (FOB)(6) ................................
19,431
23,976
30,100
36,313
30,510
Current Account Balance(6) ................................
(1,882)
(2,983)
(5,977)
(6,883)
(5,146)
Net Foreign Direct Investment(6) .......................
5,590
5,558
8,136
8,329
4,177
Net International Reserves ................................
14,947
15,436
20,949
24,030
25,356
Months of Coverage of Imports
(Goods and Services) ................................
7.2
6.1
6.7
6.4
7.9
Public Finance(7)
(billions of pesos or percentage of GDP)
Non-financial Public Sector
Revenue(8)......................................................Ps. 150,485
Ps. 169,154
Ps. 195,727
Ps. 193,195
N/A
Non-financial Public Sector
Expenditures (8)................................
Ps. 151,940
Ps. 170,485
Ps. 201,268
Ps. 191,828
N/A
Non-financial Public Sector Primary
Surplus/(Deficit)(9) ................................
10,509
11,679
13,072
17,022
3,240
Percent of GDP(7) ................................
3.3%
3.2%
3.0%
3.6%
0.7%
Non-financial Public Sector Fiscal
Surplus/(Deficit) ................................
(954)
(3,162)
(4,322)
342
(12,865)
Percent of GDP(7) ................................
(0.2)%
(0.8)%
(1.0)%
0.1%
(2.6)%
Central Government Fiscal Surplus/
(Deficit).........................................................
(13,753)
(13,069)
(11,613)
(11,067)
(20,715)
Percent of GDP(7) ................................
(4.0)%
(3.4)%
(2.7)%
(2.3)%
(4.2)%
Public Debt(10)
Public Sector Internal Funded Debt
(billions of pesos)(11) ..............................
P..
s
117,126
Ps.
124,206
Ps.
132,476
Ps.
140,935
159,025
Percent of GDP(1) ................................
34.9%
32.4%
30.7%
29.5%
32.0%
Public Sector External Funded Debt
(millions of dollars)(12)..............................
$ ..
23,353
$
25,889
$
27,923
$
28,450
33,642
Percent of GDP(1) ................................
15.9%
15.1%
13.0%
13.3%
13.8%
Some of the foregoing figures are updated by more recent information under "Recent Developments".
1:
Figures calculated using new methodology implemented by DANE in 2008, using 2000 as the base year for
calculating constant prices.
2:
Figures for 2007, 2008 and 2009 are estimated.
3:
Percentage change over the twelve months ended December 31 of each year.
4:
Average for each year of the short-term composite reference rate, as calculated by the Superintendencia Financiera
(Financial Superintendency).
5:
Refers to the average unemployment rates in the thirteen largest cities in Colombia in December of each year.
6:
Figures for all years have been recalculated according to the recommendations contained in the fifth edition of the
IMF's Balance of Payments Manual. Preliminary figures for 2005 through 2009. Imports and exports of goods do not
include "special trade operations."
7:
All figures calculated according to IMF methodology, which includes privatization, concession and securitization
proceeds as part of public sector revenues. Figures given as a percentage of GDP are calculated using a new
methodology implemented by DANE in 2008, using 2000 as the base year for calculating constant prices.
8:
The amounts of transfers among the different levels of the consolidated non-financial public sector are not eliminated
in the calculation of consolidated non-financial public sector revenue and consolidated non-financial public sector
expenditures and, accordingly, the revenue and expenditure figures included above are greater than those that would
appear were such transfers eliminated upon consolidation. See "Recent Developments--Public Sector Finance."
S-4


9:
Primary surplus/(deficit) equals total consolidated non-financial public sector surplus/(deficit) without taking into
account interest payments or interest income.
10:
Figures for 2008 are subject to revision. Figures for 2009 are provisional and subject to verification and revision.
Exchange rates at December 31 of each year. The figures for public debt given in this table differ from those set out
under "Public Sector External Funded Debt by Type" on page S-28 as a result of the application of different
methodologies.
11:
Includes peso-denominated debt of the Government (excluding state-owned financial institutions and departmental
and municipal governments) with an original maturity of more than one year, and public sector entities' guaranteed
internal debt.
12:
Includes external debt of the Government (including Banco de la República, public agencies and entities, departments
and municipal governments and state-owned financial institutions) with an original maturity of more than one year.
Sources: Banco de la República, Ministry of Finance and Public Credit ("Ministry of Finance"), DANE and Consejo Superior de
Política Fiscal ("CONFIS")
S-5


The Offering
Issuer
The Republic of Colombia.
Aggregate Principal Amount
Ps. 1,528,831,000,000
Issue Price
100% of the principal amount of the bonds. The Issue Price will be payable in
U.S. dollars based on an exchange rate for the conversion of Colombian pesos
into U.S. dollars of Ps. 1,911.07 per U.S. $1.00.
Issue Date
April 14, 2010.
Maturity Date
April 14, 2021.
Form of Securities
The bonds will be issued in the form of one or more registered global
securities without coupons, which will be deposited with a common
depositary for Euroclear and Clearstream, Luxembourg. The bonds will not be
issued in bearer form.
Denominations
The bonds will be issued in denominations of Ps. 5,000,000 and integral
multiples of Ps. 1,000,000 in excess thereof.
Interest
The bonds will bear interest from April 14, 2010 at the rate of 7.75% per year,
payable in U.S. dollars calculated as described below. We will pay you
interest annually in arrears on April 14 of each year, commencing on April 14,
2011. Interest will be computed on the basis of the actual number of days
during the period in respect of which interest is being paid, not to exceed 365,
divided by 365.
Redemption
We may not redeem the bonds before maturity. At maturity, we will redeem
the bonds at par.
Risk Factors
Risk factors relating to the bonds:
·
The price at which the bonds will trade in the secondary
market is uncertain.
·
The bonds will contain provisions that permit Colombia to
amend the payment terms without the consent of all holders.
Risk factors relating to foreign currency securities:
·
If the Colombian peso depreciates against the U.S. dollar, the
effective yield on the bonds will decrease below the interest
rate on the bonds, and the amount payable at maturity may be
less than your investment, resulting in a loss to you.
·
Government policy or actions could adversely affect the
exchange rate between the peso and the U.S. dollar and an
investment in the bonds.
·
Exchange controls could affect the peso/U.S. dollar exchange
rate and the amount payable on the bonds.
Risk factors relating to Colombia:
·
Colombia is a foreign sovereign state and accordingly it may
be difficult to obtain or enforce judgments against it.
·
Certain economic risks are inherent in any investment in an
emerging market country such as Colombia.
S-6


·
An increase in Colombia's debt-to-GDP ratio could increase
the burden of servicing Colombia's debt.
·
Colombia's economy is vulnerable to external shocks,
including the current global economic crisis and those that
could be caused by continued or future significant economic or
political difficulties of its major regional trading partners or by
more general "contagion" effects, all of which could have a
material adverse effect on Colombia's economic growth and
its ability to service its public debt.
·
Colombia's credit ratings may be changed, suspended or
withdrawn.
See "Risk Factors" below for a discussion of certain factors you
should consider before deciding to invest in the bonds.
Conversion of the payment amounts
All amounts due in respect of principal or interest will be paid in U.S. dollars,
calculated by the calculation agent by translating the Colombian peso
amounts into U.S. dollars at the Average Representative Market Rate on the
applicable Rate Calculation Date (as defined under "Description of the
Bonds--General Terms of the Bonds").
Status
The bonds will be direct, general, unconditional, unsecured and
unsubordinated external indebtedness of Colombia and will be backed by the
full faith and credit of Colombia. The bonds will rank equal in right of
payment with all of Colombia's present and future unsecured and
unsubordinated external indebtedness.
Withholding Tax and Additional
We will make all payments on the bonds without withholding or deducting
Amounts
any taxes imposed by Colombia, subject to certain specified exceptions. For
more information, see "Description of the Securities--Debt Securities--
Additional Amounts" on page 4 of the accompanying prospectus.
Further Issues
Colombia may, without the consent of the holders, create and issue additional
bonds that may form a single series of bonds with the outstanding bonds;
provided that such additional bonds do not have, for purposes of U.S. federal
income taxation (regardless of whether any holders of such additional bonds
are subject to U.S. federal tax laws), a greater amount of original issue
discount than the bonds have as of the date of the issue of such additional
bonds.
Listing
Application has been made to list the bonds on the official list of the
Luxembourg Stock Exchange and to trade them on the Euro MTF Market of
the Luxembourg Stock Exchange.
Governing Law
New York, except that the laws of Colombia will govern all matters relating
to authorization and execution by Colombia.
Additional Provisions
The bonds will contain provisions regarding acceleration and future
modifications to their terms that differ from those applicable to Colombia's
outstanding external public indebtedness issued prior to January 21, 2004.
Those provisions are described in the sections entitled "Description of the
Securities--Debt Securities--Default and Acceleration of Maturity," "--
Collective Action Securities" and "--Meetings and Amendments--Approval
(Collective Action Securities)" in the accompanying prospectus.
Calculation Agent
The Bank of New York Mellon
Use of Proceeds
The net proceeds of the sale of the bonds will be approximately
U.S. $796,086,977, after deduction of the underwriting discount and of certain
S-7


expenses payable by Colombia (which are estimated to be U.S. $300,000.
Colombia will use the net proceeds for general budgetary purposes.
Underwriting
Under the terms and subject to the conditions contained in an underwriting
agreement, dated as of April 7, 2010, Credit Suisse Securities (USA) LLC and
Deutsche Bank Securities Inc., as underwriters, are obligated to purchase all
of the bonds if any are purchased.
S-8


RISK FACTORS
This section describes certain risks associated with investing in the bonds. You should consult your financial and
legal advisors about the risk of investing in the bonds. Colombia disclaims any responsibility for advising you on these
matters.
Risk Factors Relating to the Bonds
The price at which the bonds will trade in the secondary market is uncertain.
Colombia has been advised by the underwriters that they intend to make a market in the bonds but are not
obligated to do so and may discontinue market making at any time without notice. Application has been made to list the
bonds on the official list of the Luxembourg Stock Exchange and to trade them on the Euro MTF Market of the Luxembourg
Stock Exchange. No assurance can be given as to the liquidity of the trading market for the bonds. The price at which the
bonds will trade in the secondary market is uncertain.
The bonds will contain provisions that permit Colombia to amend the payment terms without the consent of all
holders.
The bonds will contain provisions regarding acceleration and voting on future amendments, modifications and
waivers, which are commonly referred to as "collective action clauses." Under these provisions, certain key provisions of the
bonds may be amended, including the maturity date, interest rate and other payment terms, with the consent of the holders of
75% of the aggregate principal amount of the outstanding bonds. See "Description of the Securities--Debt Securities--
Default and Acceleration of Maturity," "--Collective Action Securities" and "--Meetings and Amendments--Approval
(Collective Action Securities)" in the accompanying prospectus.
Risks Factors Relating to Foreign Currency Securities
This prospectus supplement and the accompanying prospectus do not describe all the risks of an investment in
securities denominated in currencies other than U.S. dollars. If you are unsophisticated with respect to foreign currency
transactions, these bonds are not an appropriate investment for you.
The information in this section is directed to investors who are U.S. residents and does not address risks for
investors who are not U.S. residents. We disclaim any responsibility to advise prospective purchasers who are residents of
countries other than the United States with respect to any matters that may affect the purchase, holding or receipt of payments
of the bonds. If you are not a U.S. resident, you should consult your own financial and legal advisors.
If the Colombian peso depreciates against the U.S. dollar, the effective yield on the bonds will decrease below the
interest rate on the bonds, and the amount payable at maturity may be less than your investment, resulting in a loss to you.
Rates of exchange between the U.S. dollar and the Colombian peso have varied significantly over time. Historical
peso/U.S. dollar exchange rates are presented in the table under the heading "Certain Defined Terms and Conventions--
Colombian Peso Information." However, historical trends do not necessarily indicate future fluctuations in rates, and should
not be relied upon as indicative of future trends.
Currency exchange rates can be volatile and unpredictable. If the Colombian peso depreciates against the U.S.
dollar, the effective yield on the bonds will decrease below the interest rate on the bonds and the amount payable at maturity
may be less than your investment, resulting in a loss to you. Depreciation of the Colombian peso against the U.S. dollar may
also adversely affect the market value of the bonds.
Government policy or actions could adversely affect the exchange rate between the peso and the U.S. dollar and
an investment in the bonds.
Colombia presently has a floating exchange rate. However, the Central Bank of Colombia has from time to time
intervened in the foreign exchange market to support the value of the peso or to adversely affect the value of the peso. See
"Monetary System--Foreign Exchange Rates and International Reserves--Appreciation of the Peso and Measures Taken by
the Government" in Exhibit D to Colombia's annual report on Form 18-K for the year ended December 31, 2008, filed with
the SEC on August 14, 2009 ("2008 Annual Report"), as amended by Amendment No.1 to Colombia's annual report for the
year ended December 31, 2008 filed with the SEC on November 18, 2009 ("Amendment No. 1"). Such interventions or
other governmental actions could adversely affect the value of the bonds, as well as the yield on the bonds and the amount
payable to you at maturity.
S-9


Even in the absence of governmental action directly affecting currency exchange rates, political or economic
developments in Colombia or elsewhere could lead to significant and sudden changes in the exchange rate between the peso
and the U.S. dollar.
Exchange controls could affect the peso/U.S. dollar exchange rate and the amount payable on the bonds.
Colombia has a system of exchange controls that has been in place since 1967. However, exchange control
regulations have been substantially relaxed over the past fifteen years, and the peso/U.S. dollar exchange rate is no longer set
by the Government or by the Central Bank. The peso/U.S. dollar exchange rate is set by the market, based upon the supply
of, and demand for, U.S. dollars. Currently, the system of exchange controls only determines which transactions involving
inflows or outflows of foreign currency are permitted. In addition, the applicable exchange control regulations provide that
the incurrence of foreign indebtedness by Colombia, as well as payments to service Colombia's external debt, are permitted
transactions. Changes in exchange control regulations could cause the value of the peso to depreciate against the U.S. dollar,
resulting in a reduced yield to you, a possible loss on the bonds and a possible adverse impact on the market value of the
bonds.
Risk Factors Relating to Colombia
Colombia is a foreign sovereign state and accordingly it may be difficult to obtain or enforce judgments against it.
Colombia is a foreign state. As a result, it may not be possible for investors to effect service of process within their
own jurisdictions upon Colombia or to enforce against Colombia judgments obtained in their own jurisdictions. See
"Description of the Securities--Jurisdiction; Enforceability of Judgments" in the accompanying prospectus.
Certain economic risks are inherent in any investment in an emerging market country such as Colombia.
Investing in an emerging market country such as Colombia carries economic risks. These risks include economic
instability that may affect Colombia's economic results. Economic instability in Colombia and in other Latin American and
emerging market countries has been caused by many different factors, including the following:
·
high interest rates;
·
changes in currency values;
·
high levels of inflation;
·
exchange controls;
·
wage and price controls;
·
changes in economic or tax policies;
·
the imposition of trade barriers; and
·
internal security issues.
Any of these factors, as well as volatility in the markets for securities similar to the bonds, may adversely affect
the liquidity of, and trading markets for, the bonds. See "Forward-looking Statements" in the accompanying prospectus. For
further information on internal security, see "Recent Developments--Republic of Colombia--Internal Security."
An increase in Colombia's debt-to-GDP ratio could increase the burden on Colombia's ability to service its debt.
According to preliminary figures, Colombia's ratio of total net non-financial public sector debt to gross domestic
product ("GDP") decreased from 36.0% at December 31, 2006, to 32.3% at December 31, 2007, and to 31.9% at December
31, 2008, but increased to 32.7% at September 30, 2009. According to preliminary figures, the Colombian economy grew
approximately 0.4% in real terms in 2009 and it is expected to grow 2.5% in real terms during 2010. Any increase in the
nonfinancial public sector debt to GDP ratio, whether due to an increase in debt levels or a decrease in GDP, or both, could
have an adverse effect on Colombia's economy and ability to service its debt. See "Economy--Gross domestic product" in
Exhibit D to Colombia's 2008 Annual Report, as amended by Amendment No.1, and "Recent Developments--Public Sector
Debt" in this prospectus supplement.
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