Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Colombian Investment Climate keeps getting Hotter

Moody's recently upgraded Colombia's debt rating to investment grade. Following S&P's upgrade, this satisfies the two agency requirement that many bond funds have to be able to invest in foreign debt.

Colombia is facing a 'perfect storm' of investment opportunities as of late. Long-term and short-term factors continue to work in its favor.
1)The government continues to make progress against right-wing and guerrilla groups, and more importantly, dispelling the international myths of the last few decades.
2) The government of Uribe, and now Santos, has truly been the free market miracle among Latin America since 2002. The free trade agreement with Canada goes into effect in July, putting pressure on the US to approve its own agreement. Agreements with the EU and eventually Panama, South Korea, and Japan will open the world up to colombian exports, provide stability for its businesses, and bring in needed direct investment.
3) The formation of the Mercado Integrado Latinoamericano is a natural fit for the three countries. The liquidity and depth will be a boon to businesses looking for capital. As other countries join, Mexico and Panama, it will drive regional synergies and investment. The benefits from regulatory asimilation alone could fill a book.
4) The central bank continues to show monetary conservatism raising rates for the fourth time to 4% as consumers and commercial lending drives growth.
5) Foreign direct investment increased 50% to 3.23 billion over the last year, primarily to the nations vast oil and gas industry. As long as the natural resources in latin america continue to fall under the hand of socialist governments, Colombia will continue to honeymoon foreign investors and reap the benefits.

Hard to imagine, but this is only a short list contributing to a favorable investment climate. The central bank is forecasting 5% GDP growth this year. Barring a melt down in european economies or a black swan event, I think GDP could go higher, on the order of 5.25%. This is not to say investors shouldn't be aware of possible hurdles.

1) China and the US are providing an immense amount of liquidity. China in the form of an unquenchable thirst for all things commodity and its need to invest vast amounts of reserves. The US in the form of rock-bottom rates and easy money. China is trying to cool its own lending environment from over-heating and the US (hopefully) will eventually become more fiscally and monetarily responsible.
2) As with most emerging economies, the government must devise a strategy to diversify the economy and avoid dutch disease. This will also help alleviate the problem exporters have been seeing with the revaluation of the peso.
3) Infrastructure is a problem and needs to be addressed if the country wants to continue to attract investment.
4) The usual suspects of hurdles to emerging market growth: reliance on IMF and World Bank as a conduit for lending, a less developed educational system, and lower productivity.

More detailed research by sector available upon request.