Ecopetrol and Interbank raised a total of $2.15 billion in the international bond market on Tuesday, joining the stream of Latin American issuers heading to the market this month to lock in lower borrowing costs.
Ecopetrol, Colombia’s state-owned oil company, raised $1.85 billion in the sale of 12-year bonds while Interbank, one of Peru’s biggest lenders, raised $300 million in the sale of 10-year, Tier 2 notes. Both offerings are designed to fund tender offers.
Ten-year US Treasury yields hit a five-month low in late December, and while they have lost some ground since the start of 2024, it has not deterred issuers such as Mexico’s Grupo Bimbo, Peru’s Banco de Crédito, the Mexican subsidiary of Spain’s BBVA from tapping the bond market.
Ecopetrol priced the new 8.375% 2036 notes at $99.441 to yield 8.45%, equal to a spread of 442.5 basis points over the 10-year Treasuries, after opening the initial price talk around 8.75%, a source involved in the deal told LatinFinance.
Investors placed as much as $5.8 billion in orders, according to a second source.
Earlier on Tuesday, the company announced an offer to repurchase any or all of its 4.125% 2025 bonds, which have $1.2 billion outstanding. Pricing for the buyback will be determined by January 16, it said in a statement.
INVESTMENT OUTLAYS
BBVA, Bank of America and Citi were joint bookrunners on the bond sale and are dealer managers on the buyback. S&P Global Ratings rates the new notes BB+.
Once it has completed the tender offer, Ecopetrol said it plans to use the remaining proceeds to fund investments, according to a prospectus filed with the US Securities Exchange Commission.
Interbank, for its part, priced new 2034 notes at par to yield 7.625%, after opening initial price talk in the 8% to very low 8% area and setting the guidance between 7.625% and 7.75%, said a source familiar with the deal. Orders peaked at $850 million, the source said.
The Lima-based lender plans to use the proceeds to fund a tender offer announced last week to repurchase 6.625% 2029 fixed-to-floating rate bonds. Interbank last tapped the global market in June 2020.