821.51/5–147: Airgram

The Ambassador in Colombia (Wiley) to the Secretary of State


A–191. Reference is made to my confidential telegram #289 of April 30, 1947,20 requesting the Department to inform Dr. Rogers that Drs. Esteban Jaramillo and Carlos Lleras Restrepo, representatives of the six governors and two alcaldes in the matter of foreign debt settlement, had issued a statement to the press last night for publication today, May 1, and that Dr. Rogers would be at liberty to publish all details concerning the agreement. The Bogotá press of May 1 carried the statement in full, which is as follows: (in translation)

“As has been appropriately reported, the Departments of Antioquia, Caldas, Cundinamarca, Santander, Valle del Cauca and Tolima, and also the municipalities of Medellín and Cali, commissioned Drs. Esteban Jaramillo and Carlos Lleras Restrepo to start negotiations with the Foreign Bondholders’ Protective Council with offices in the United States, regarding foreign loans obtained by the aforesaid entities in the years prior to 1930. These loans are in default and the interest and amortization payments have been stopped since 1932.

“Drs. Jaramillo and Lleras Restrepo had several interviews with Dr. James Rogers, President of the Council, in the course of which a conversion formula was reached, which the Council accepts in principle and which requires for presentation to the bondholders, the approval of the Departmental Assemblies and Municipalities.

“The proposed solution covers the following loans, for each of which are given the rate of interest, the due date, the initial amount of issue, the sums normally paid before the moratorium, and the outstanding balance, that is, the difference between the initial amounts and the normal amortization payments for each debtor entity:

Issue Amortization Balance
Antioquia 7% 1945 20,000,000 2,828,000 17,172,000
Antioquia 7% 1957 12,350,000 843,000 11,507,000
Caldas 7½% 1946 10,000,000 1,409,000 8,591,000
Cundinamarca 6½% 1959 12,000,000 463,000 11,537,000
Santander 7% 1948 2,000,000 209,000 1,791,000
Valle del Cauca 7% 1948 4,500,000 635,000 3,865,000
Valle del Cauca 7½% 1946 4,000,000 591,500 3,408,500
Tolima 7% 1947 2,500,000 388,000 2,112,000
Municipality of Medellín 6½% 1954 9,000,000 622,000 8,378,000
Municipality of Medellín 7% 1951 3,000,000 356,000 2,644,000
Municipality of Cali 7% 1947 2,885,000 477,000 2,408,000
Totals 82,235,000 8,821,500 73,413,500

[Page 572]

“The following are the conditions reached during the course of the negotiations between Drs. Jaramillo and Lleras Restrepo and Mr. Rogers:

  • a) The future rate of interest for all the above mentioned loans will be 3% per year. This represents reductions which range from 3½ to 4½% per year.
  • b) The coupons of interest due as of the date when the new conditions become effective will be redeemed in exchange for departamental or municipal foreign bonds at 3% per year, in an amount equal to 20 per cent of the principal of the bond to which such coupons belong. The bonds to be issued in the above mentioned manner will be in every way equal to those issued for the exchange of the original bonds actually in circulation.
  • c) Not only the bonds allotted for the conversion of the principle of those now in circulation, but also those to be issued for the capitalization of the interest, as mentioned above, will be amortized through an amortization fund equivalent to 0.6 per cent of the nominal value of the bonds during the first five years and 1.0 per cent of such nominal value from the sixth year on, and such funds will be increased by the amount of interest due on the bonds as amortized. The amortization fund will be invested in buying bonds in the open market.
  • d) The time for the total amortization of the bonds will be thirty years.
  • e) The security given as specific guarantee for the loans now in force will not be offered as specific guarantee for the new bonds. But the Departmental Governments will try to get the nation’s guarantee for the latter. Regarding the unpaid interest, it should be noted that the amount thereof is today more than 100 per cent of the principal of the bonds in circulation. Consequently, the reduction obtained is equivalent to more than 80 per cent of the total amount of interest due.

“Dr. Jaramillo and Dr. Lleras Restrepo have already presented to the Governors and Mayors of the interested entities a copy of the proposal contained in the present communication, which will be submitted for consideration to the respective Assemblies and Municipal Councils.21

Bogotá, April 30, 1947.”

  1. Not printed.
  2. In a letter of July 15, 1947, to Rogers, not printed, Lleras Restrepo advised that five of the six departments (Santander being the exception) and the two municipalities had approved the settlement (821.51/7–1547). Ambassador Wiley’s successor, Willard L. Beaulac in telegram 801, December 15, 1947, not printed, advised that the Colombian Congress had agreed to guarantee service on the debt (821.51/12–1547).