Ecopetrol Roadshows Hot Bond Issue

Colombia’s Ecopetrol begins a roadshow today in support of an eagerly anticipated 10-year dollar bond, to be its first public debt placement in over 10 years. The BB+ borrower has been preparing an issue, expected to raise at least $500m with a 10+ tenor, for several months as it looks to make better use of balance sheet. The state-owned oil producer will have a team hitting New York today before going to London tomorrow and Wednesday, and another leading off in Boston today before visiting LA tomorrow and San Francisco Wednesday. Proceeds from the sale will fund the company’s investments, which should require $2.7bn through the end of the year, according to Colombian brokerage Correval. Barclays and JPMorgan are managing the process. Ecopetrol will look to catch the same wind that has recently brought blowout book sized to 10-year jumbos from other quasi-sovereigns, such as Petrobras, Codelo and Pemex. “Ecopetrol’s current level of debt is very low and the greater leveraging could generate value in that the debt brings fiscal benefit and lowers the cost of capital,” Correval says in a note, though it cautions about the current market environment. “The present market doesn’t seem very favorable, as we have observed in the last few sessions an increase in risk aversion and the transaction’s marketing could be difficult for a new issuer, and one with as aggressive an investment plan as that of Ecopetrol,” the shop says. If it does not move fast, Ecopetrol will have to wait until September, since cross-border DCM is about to close for the summer.