Ecopetrol 'to hasten bond sale'

Bond sale: Ecopetrol may look to cushion blow of looming Fed decision

Colombia's state-controlled Ecopetrol is expected to issue as much as 1.5 trillion pesos ($797 million) of bonds by September in a bid to reduce the impact of any market turmoil that could result from the next US Federal Reserve meeting, according to a report.

Ecopetrol has received regulatory approval to issue as much as 3 trillion pesos of local bonds and another $3 billion overseas, Reuters reported citing sources close to the transactions.

The company is likely to issue at least 1 trillion pesos of bonds in the domestic market as soon as this month, the sources told the news wire.

Although investors may be more interested in buying short-term debt from Ecopetrol in a bid to maintain liquidity, the company is likely to issue debt with a maturity of at least five years, the sources said.

Some economists and policy makers expect the Fed to begin reducing its bond-buying stimulus program as soon as 18 September, a move that could draw investments away from emerging markets like Colombia, as yields from US assets are expected to become more attractive, while carrying lower risk.

"It's 100% probable that the issue will come before the end of the month; it's almost a done deal," said one source.

Ecopetrol, which is 88.5% owned by the government, said it has not yet set a date for the bond sale.

"What we want is to have all the permissions and authorisations ready so that we can go ahead as soon as it is considered opportune," the company said in a response to a question by Reuters on the sale.

Ecopetrol was given approval by the Finance Ministry on 8 August to issue up to $3 billion in dollar-denominated bonds to finance its long-term investment plan. The company plans to invest $9.5 billion in 2013 alone.

Ecopetrol last turned to the capital markets in August of 2012 when it issued 2.4 trillion pesos in shares to finance investments. It had sold 1 trillion pesos in bonds prior to that, in December 2010.

In quarterly results released on 31 July, Ecopetrol said net profit fell 6.8% from a year earlier to 3.4 trillion pesos as the price of oil slipped and transport costs rose. Its production from operations at home and abroad was equivalent to 778,100 barrels of oil equivalent per day.


Become an Upstream member!

Membership includes a subscription to our weekly newspaper providing in-depth news from the energy industry, plus full-access to this site and its archives. Still not convinced? Try our free trial.

Already a member?