Bloomberg News

Colombia’s Sura Drops as S&P May Cut to Junk on ING Purchase

July 27, 2011

(Updates with Restrepo comment in fourth paragraph.)

July 27 (Bloomberg) -- Colombia’s Grupo de Inversiones Suramericana fell the most in a month after Standard & Poor’s said it may cut the company’s ratings to junk after it agreed to pay $3.9 billion for ING Groep NV’s Latin American assets.

Grupo Sura, as the Medellin-based company is known, fell 2.2 percent to 35,400 pesos at 4:02 p.m. New York time. It earlier plunged as much as 5.4 percent, the most since June 13.

Sura, whose Bancolombia unit is the country’s largest bank, agreed this week to pay about 2.7 billion euros ($3.9 billion) for most of the Latin American insurance operations of ING Groep.

“There is still some uncertainty as to where they’re going to get all the resources,” said Mauricio Restrepo del Toro, analyst at brokerage Bolsa y Renta. “They plan to issue shares, plus funds they already have, and the rest may be debt.”

Bancolombia plans to sell as much as 800 billion pesos of bonds, the company said yesterday in a filing to the Colombian stock exchange.

S&P put ratings of Sura, including the BBB- global scale corporate credit rating and the BBB- senior unsecured debt rating, on CreditWatch “with negative implications,” the ratings company said in a statement.

S&P said “the incremental indebtedness” from the planned acquisition could weaken the company’s credit profile. BBB- is S&P’s lowest investment-grade rating.

The sale includes ING’s pensions, life insurance and investment management operations in Chile, Colombia, Mexico, Uruguay and Peru.

Bridge Loan

Sura will pay ING about 2.62 billion euros in cash and assume 65 million euros in debt, according to an ING statement July 25. The company plans to use a bridge loan from six international banks in the transaction, Andres Bernal, Sura’s Vice-President of investment said yesterday, without giving further details.

The company’s shareholders approved plans to offer as many as 131 million preferred shares and allow for conversion of up to 10 percent of existing common shares into preferred shares, according to a regulatory filing last month.

Sura will gain more than 10 million customers and 49 billion euros of assets under management from the transaction, which the companies expect to close at the end of this year. S&P said it will “resolve” the CreditWatch once the transaction takes place.

A Sura spokeswoman did not immediately respond to an e-mail seeking comment.

--Editors: Marie-France Han, Richard Richtmyer

GRUPOSUR CB

To contact the reporter on this story: Blake Schmidt in Bogota at bschmidt16@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net


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