The Republic of Colombia has mandated Goldman Sachs and J.P. Morgan to lead-manage its issue of a bond backed by a rolling credit guarantee from the World Bank, and Salomon Smith Barney may soon be added to the list of managers.

News of the mandates came out sooner than the bankers on the deal wanted when Finance Minister Juan Manuel Santos recently announced that a $1.3 billion bond would be launched within three weeks. This timeline and size seem overly aggressive, according to sources close to the deal, who said a launch is not likely until late February or March at the earliest.

Before the bond is issued, Colombia, the World Bank and the lead managers must determine whether the bond will be sold in one tranche or several pieces with varying maturities. Once that is done the board of directors of the World Bank must still authorize the transaction.

Despite these uncertainties it seems likely that the deal will weigh in at around $1.25 billion to $1.3 billion and will be backed by a $250 million guarantee from the World Bank. This would indicate a leverage ration of roughly one to five, which is lower than the one to six ratio implicit in the $1.5 billion World Bank-backed bond Argentina sold in late 1999. Like the Argentine transaction, Colombia's bond will likely be marketed to high-yield investors who would not be willing to buy Colombian credit without World Bank involvement.

The transaction will mark the fourth international bond backed by a World Bank rolling credit guarantee. The previous three were issued by Argentina, Thai utility EGAT and Brazilian energy concern, Transportadora Brasiliera Gasoduto.

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