As any other security, an investor may call the principal invested by selling the security on the financial market. The conditions of the security sale or trading in the financial market will certainly depend on the market conditions at the time of the transaction.
Mortgage-backed securities bear a fixed interest rate, so interest payment is fixed, depending on the invested principal. Some TIPS issues are denominated in UVR (Actual value unit reference rate), an index that changes once a month as per the monthly inflation, which makes UVR TIPS interest fixed but may change when converted to Colombian pesos.
These securities are dematerialized. Thus, they are held in custody by Deceval (Central depository of securities), through an agent duly authorized to operate on the Colombian financial market. Title of ownership may change by the purchase/sale on the secondary market. Accordingly, they may be offered as guarantee.
Principal amortization of mortgage-backed securities is made on a monthly basis.
There is not a minimum investment term. Securities are purchased on the primary market through an authorized stockbroker at an auction of the Bolsa de Valores de Colombia (Stock Exchange of Colombia) or on the secondary market through any stock intermediary. Being securities, TIPS may be purchased and sold at any time.
We invite you to visit our section Issues, under Issue Information where you can find a copy of each contract.
The business day before the payment of each issue, the Structuring and Risk Director´s Office releases the table of amortizations in prepayment and valuation scenarios for the valuation of securities.
TIPS N financial returns accrued during their effective term are taxable with the income and complementary tax. The exemption applicable to TIPS E securities lost effectiveness for new issues carried out after December 23, 2010.
Financial returns accrued during the TIPS E effective term are exempt from income and complementary taxes in the terms of Law 546/1999 §16 as modified by Law 964/2005 §81. In addition, pursuant to that regulation the inflation component of the TIPS E securities will not be deemed as taxable income under any circumstance.
After the underwriting, TIPS will not be subject to any trade minimums or multiples. The reference for trading will be the bondholders outstanding principal balance of TIPS of the corresponding tranche as of the date the relevant transaction takes place, and in any case the trade amount will not exceed said balance. In any event and considering that the TIPS amortization and early principal payments resulting from trigger events may reduce the outstanding principal balance in up to one (1) unit of Colombian Pesos (COP 1.00), then the TIPS may be transferred up to that value.