[ad_1]
Ecopetrol became the first non-financial company in Latin America to test international debt markets in nearly two months, selling $ 2 billion in bonds on Friday as it adjusts to a fading oil price that has affected the Energetic industry.
(Read: Ecopetrol gives ground in its international operation)
Ecopetrol, majority owned by the Colombian government, is issuing 10-year bonds with a yield of 6.875%, approximately 80 basis points more than the yield on its bonds maturing in 2026, according to data compiled by Bloomberg.
(Read: Ecopetrol closes plant due to death of infected covid-19 employee)
The offer comes after an active month of sovereign debt sales by Latin American governments. Brent crude prices have plummeted by about a third in the past two weeks due to oversupply and falling demand due to the global economic crisis caused by the spread of COVID-19.
The drop in prices has hit oil-producing countries in Latin America and their state-controlled companies. Meanwhile, credit markets were largely closed to Latin American debt issuers until this month, when governments, including Paraguay, Guatemala and Peru, as well as a Mexican bank, sold debt.
The sale of Ecopetrol is the first sizeable dollar bond issued by a non-bank company since the first week of March, according to data compiled by Bloomberg.
Although Ecopetrol has maintained its investment grade credit rating, investors seemed to doubt the size and timing of the sale. “This week we have finally seen new high-performance emissions, and also some companies like Ecopetrol.
The market is clearly going down the quality scale, and I’m less and less excited, “says Guido Chamorro, co-director of emerging market currency debt at Pictet Asset Management in London.” I’m not a big fan of oil companies yet. ”
The drop in oil prices reduced Ecopetrol’s income and earnings in the first quarter, the company said in a regulatory document in
Colombia. I do not rule out further reductions in capital spending or production cuts, after announcing a cut of around $ 1.2 billion from its capital spending plan for 2020 last month and the adoption of austerity measures.
“It is a bit difficult to understand why they issue and with the size of Friday, but the idea is probably to prop up liquidity and anticipate a downgrade,” explains Roger Horn, senior emerging markets strategist at SMBC Nikko Securities America in New York. “The thing is, they’re already offering high-performance prices.”
