Cablegate: Why Few Colombian Companies Are Listed On Nyse
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SUBJECT: WHY FEW COLOMBIAN COMPANIES ARE LISTED ON NYSE
REF: A) 09 BOGOTA 3415; B) BOGOTA 95
1. (U) Summary. Only seven Latin American countries have
companies listed on the NYSE (New York Stock Exchange). Brazil
leads with 33 companies, followed by Mexico (19), Chile (12),
Argentina (11), Panama (3), Peru (2), and Colombia (2). Ecopetrol
(oil and gas) and Bancolombia (financial services) are the only two
Colombian companies listed on the NYSE, though four other domestic
companies can be traded on the NYSE through a designated U.S.
broker. Interest in listing Colombian companies on the NYSE is
growing, primarily to obtain international notoriety -- but not for
raising capital. Raising funds locally is preferred: Colombia's
stock market generated more than a 1,500 percent return over the
How to Access the NYSE
2. (U) Foreign companies sell their shares on the NYSE through
American Depositary Receipts (ADRs). There are three ADR
categories. Level 1 ADRs can only be issued by a designated U.S.
bank or brokerage and are not listed on the NYSE. Level 2 ADRs are
listed on the NYSE, but the foreign companies must follow U.S.
Generally Accepted Accounting Principles (GAAP) standards and meet
the exchange's listing requirements and SEC regulations. Level 3
ADRs also are listed on the NYSE with an option to raise capital,
but must follow stricter requirements, similar to those of
3. (U) Colombian companies have shown an interest in being a part
of the NYSE, but on a limited scale. Ecopetrol and Bancolombia are
the only two listed on the NYSE as ADR level 2 and 3, respectively.
Shares from Interconexion Electrica SA (ISA - energy generation),
Suramericana de Inversiones (financial holdings), Argos (cement),
and recently Compania Nacional de Chocolates (food) are sold as ADR
level 1 stock.
4. (SBU) Bancolombia has been listed on the NYSE since 1995;
Ecopetrol's listing is more recent -- September 2008. Ecopetrol's
massive planned expansion requires international recognition, which
the NYSE provides (ref A). It has yet to seek ADR level 3 shares
due in part to its ability to raise billions in capital through
issuing bonds, selling a small percentage of the Government's stake
in Ecopetrol, or receiving a US$ 1 billion credit facility from
Ex-Im Bank (ref B).
5. (SBU) The other four Colombian companies have expressed
interest in raising their visibility in the U.S. exchange markets,
but have yet to follow through, largely because of the requirements
and associated costs to obtain a NYSE listing and the
record-breaking performance of Colombia's stock exchange.
1,530 Percent Return Versus a Negative Return
6. (U) In the past decade, Colombia's stock market has soared.
According to a recent Bank of America Merrill Lynch report on the
performance of emerging markets over the past decade, "if you had
invested US$100 in emerging market stocks on Dec. 31,
1999, you'd have US$262 today, while $100 invested in the S&P
(Standard & Poors) would be worth $91." Complementing this notion
is the study's list of top performers, where Colombia's stock
market ranked number one with a 1,529 percent return over the last
7. (SBU) Estefania Leon, senior stocks analyst from Correval S.A.,
told us that Colombian companies with an international presence are
interested in the NYSE more for international prestige than for
raising capital. She noted that the strict requirements to list a
foreign company (e.g. U.S. GAAP and SEC regulations) are too costly
for most Colombian companies to adopt.