Ecopetrol Pushes Debt Issue

Colombian oil giant Ecopetrol has ample liquidity but it hopes to get its first bond issue placed soon to help boost balance sheet efficiency. “There is urgency, we’re already in April,” Ecopetrol president Javier Gutierrez tells LatinFinance. However, specifics remain to be worked out. “We’re considering all possibilities, but this year, we’ll go out and get financing,” adds the official. Shareholders recently approved a plan to sell up to $4.1bn in bonds in international and local markets. A deal would mark Ecopetrol’s first public debt placement in over 10 years and investors are expected to jump on it. “We’re in conversations with a lot of banks, taking proposals. But there’s still no specific definition,” says Gutierrez. Options include bonds and loans in both local and international markets, and Gutierrez says that domestic demand appears strong. Local brokerages expect an offering of as much as COP3trn ($1.2bn) in size. An international bond deal would meanwhile be highly dependent on an opportune window, given the likelihood of a double B rating. Ecopetrol is rated BB+ by Fitch. New York-based bankers met Ecopetrol in Medellin over the weekend during IDB meetings, but they do not expect bond business short term. “Over the next few months, we’ll put together a structure for financing plans,” says Gutierrez. Asked whether Ecopetrol is in a hurry, Gutierrez says the company is proceeding “without hurry, but without pause.” Speaking of equity, the official says Ecopetrol is not planning to target an issue at foreign investors. It can raise another 9.9% capitalization, following a successful locally-targeted IPO in 2007 which was equivalent to 10.1% of the company. “In the second round, we have to go back to the same people as in the first phase, fundamentally Colombian citizens and the local financial sector,” says the official. He adds that the appetite locally will likely be very strong. “We want to first issue debt to cut the cost of capital slightly,” Gutier