Colombia: The rationale behind using Total Return Swaps (TRS) as a debt management tool

The Colombian government has recently been in the spotlight due to its decision to abandon its fiscal rule and its unprecedented debt management operation s . This note does not attempt to review all of the Ministry of Finance's debt management operations. Instead, it exclusively focuses on the rationale behind using total return swap s (TRS) to pursue an aggressive and risky debt management strategy. To the best of our knowledge, no government of an Emerging Market nation has ever used TRS for debt liability operations. We also outline potential risks to the operation.