Following Decree 562, which created a temporary compulsory investment for banks and credit institutions in internal public debt securities called Títulos de Deuda Solidaria (TDS), whose resources will be used to mitigate the economic and social consequences caused by the coronavirus (Covid-19), the National Government through Decree 685 ordered the issuance of TDS up to COP 9.811.300.000.000.
The TDS will be dematerialized instruments administered by the Central Bank, which will be freely negotiable and will have an initial term of one (1) year counted upon their issuance, which may be extended for equal terms at the decision of the Ministry of Finance and Public credit until 2029.
The TDS will have a return for investors that will be equal to the lower amount of the following rates: a) The cut-off rate resulting from the issuance of the short term TES immediately prior to the date of issuance or each extension; or b) The simple average of the cut-off rate resulting from the four (4) issuance of short term TES immediately prior to the date of the issuance or each extension. Both the payment of the capital and the payment of the interest rates shall be paid from the debt service of the Nation’s General Budget.
In accordance with the provisions of the new regulation, credit institutions will be required to acquire the TDS in the following percentages, which must be accredited before the Superintendence of Finance:
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Up to three percent (3%) of the total deposits subject to reserve requirements of the obligated subjects, previously deducted the reserve requirement, based on the financial statements as of March 31, 2020.
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Up to one percent (1%) of the total deposits and liabilities subject to reserve requirements of obligors, previously deducted the reserve, based on the financial statements as of March 31, 2020, including those obligations with a reserve percentage of zero percent (0%).
Obligated parties must subscribe the TDS in up to two installments, the first 80% of the obligatory investment until May 28, 2020 and the remaining 20% until July 13, 2020.
The resources generated by the TDS issuance will be incorporated into the budget as an additional source of money of the Emergency Mitigation Fund -FOME.