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Bond Market News
Medco Energi Upgraded to Ba3
August 27, 2025
Medco Energi was upgraded to Ba3 by Moody’s on the back of stronger scale and capacity to absorb future acquisitions while maintaining solid credit metrics. The upgrade reflects Medco’s consistent deleveraging ability, revenue visibility from fixed-price natural gas contracts (around 50% of production), and solid liquidity. Moody’s expects Medco’s leverage to remain below 3.5x debt/EBITDA and interest coverage above 3.5x. Moody’s projects annual EBITDA at $1.1–1.2bn over the next two years based on medium-term oil prices of $55–75/bbl, with its gas sales providing a buffer against oil price volatility. Liquidity remains strong with $824mn in cash, $1.2bn in undrawn credit lines, and no near-term refinancing risks.
Since 2022, Medco has repurchased about $1.7bn of dollar bonds through tenders and market buybacks, extending its maturity profile. The company has spent $2.5bn on acquisitions since 2020. Its latest purchase of Repsol’s 24% stake in the Corridor block for $425mn in July 2025 was funded by a mix of debt and cash.
Medco Energi’s 8.625% 2030s are up by 0.3 points at 106.31, yielding 7.03%.
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