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Ecopetrol is planning to utilize a $250mn loan from Sumitomo Mitsui Banking Corp to reduce its overall debt, after having postponed its planned $1.75bn dollar bond issuance last week. This $1.75bn planned dollar bond was likely to be priced at a yield of 7.65%, and was aimed at funding a debt buyback and to prepay the 2030 loan. Ecopetrol has indicated that it may reconsider the offer if market conditions improve. The company plans to pay off half of its $1bn loan due in 2030 – partly using a $250mn credit line from Sumitomo Mitsui and the remainder from available cash balances. Ecopetrol said that the payment of the 2030 loan is part of its strategy to optimize credit metrics and that it was not dependent on the bond issuance. The buyback of its 2026s is currently in the process. Some analysts note that investors view Ecopetrol as a quasi-sovereign entity and may welcome a revised bond offering with higher yields.
Ecopetrol’s dollar bonds traded stable with its 8.875% 2033s at 105.5, yielding 7.94%.
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