Ecopetrol Sold $2 Billion of 31-Year Bonds After Yields Drop

Ecopetrol SA (ECOPETL), Colombia’s state-owned oil producer, sold $2 billion of 31-year bonds as borrowing costs for longer-dated debt fall to the lowest in almost a year.

Finance Minister Mauricio Cardenas told reporters in Bogota today that the offering was a “total success.” The oil company sold the securities to yield 5.92 percent, or 2.55 percentage points more than similar-maturity Treasuries. Deutsche Bank AG and Goldman Sachs Group Inc. managed the sale.

The new bonds will be rated BBB, the second-lowest investment grade and in line with Colombia’s government, Fitch Ratings said today in a statement. The average cost companies in developing countries pay to borrow for more than 10 years is about 6.5 percent, the lowest level since June 2013, according to JPMorgan Chase & Co.’s CEMBI Broad index.

“The yield seems quite tight in our opinion and still the issue seems to be in great demand,” Jennifer Stubbert, a fixed-income trader at Credit Agricole SA’s Miami brokerage unit, said in an e-mailed response to questions. “I would expect any investment-grade corporate credit to be well received. In the case of Ecopetrol you also have the government credit behind it, and it’s a well known issuer.”

The offering follows a surge in corporate bond sales across emerging markets as long-term borrowing costs for companies in developing markets fall. The oil company will use the funds to help pay for its $68.5 billion capital expenditure program for 2014-2020, Fitch said in a statement.

Ecopetrol last tapped international markets in September, when it sold $2.5 billion of debt due in 2043, 2023 and 2018. The yield on the bonds due in 2023 have fallen 0.6 percentage point this year to 4.51 percent.

To contact the reporters on this story: Andrea Jaramillo in Bogota at ajaramillo1@bloomberg.net; Katia Porzecanski in New York at kporzecansk1@bloomberg.net

To contact the editors responsible for this story: Brendan Walsh at bwalsh8@bloomberg.net Bradley Keoun

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