Management's attention to balance sheet enabled Ecopetrol (BB + / Baa3 / BB +) to significantly reduce debt and leverage, which allowed the company to navigate the corona crisis comfortably enough. The rebound in the price of Brent crude oil may lead to a positive change in the credit rating from the S&P agency. Crude oil futures recovered significantly after the release of corporate reports for the 1st quarter of 2020, in which S&P's outlook on Ecopetrol's credit score was revised to negative.
YTM
3%
RISK
BB+ / Baa3 / BB+
DURATION
4.2
A rebound in Brent crude oil prices could push the S&P outlook for Ecopetrol's credit rating to positive. However, the rating upgrade itself may have to wait until the macroeconomic situation in Colombia improves following the proposed fiscal reforms. We would like to draw attention to the Ecopetrol Eurobond in USD maturing in June 2026 (US279158AL39). Eurobonds with a duration of 4.2 years offer investors a yield of 3% per annum.
State controlled Ecopetrol performs crude oil and natural gas exploration, production, refining, and transportation. The largest company in Colombia (where it accounts for 60% of national production and is one of the world's 40 largest oil companies), Ecopetrol has two large refineries (Barrancabermeja and Cartagena) strategically located to supply the domestic market and to export oil and oil products to the southern US. Ecopetrol explores for oil and gas across Colombia, and is expanding internationally through exploration partnerships in Brazil, Peru, and the US Gulf of Mexico. In 2013 the company reported proved reserves of more than 1.4 billion barrels of oil equivalent.