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Ecopetrol Said to Join Pemex Selling Bonds as Issuance Jumps

Sept. 10 (Bloomberg) -- State-controlled oil producers Ecopetrol SA and Petroleos Mexicanos are selling at least $2.9 billion of bonds to international investors as emerging-market debt issuance rebounds from an August lull.

Colombia’s Ecopetrol will sell $2.5 billion of dollar bonds due in five, 10 and 30 years, according to a person familiar with the offering who asked not to be identified because terms aren’t set. Pemex, as Mexico’s oil company is known, plans a sale of $400 million of debt due in 2024, guaranteed by the Export-Import Bank of the U.S., another person said.

Emerging-market issuers have sold $15.1 billion of debt in international markets in the first 10 days of September, or 77 percent of what they sold during the entire month of August, according to data compiled by Bloomberg. The tally doesn’t include the Ecopetrol or Pemex bonds.

“Both names have ready access to the new issue market given their name and issuance history, so were able to react when the market turned receptive to new issues,” Michael Roche, an emerging-market strategist at broker-dealer Seaport Group LLC, said in an e-mailed response to questions.

Ecopetrol’s $350 million of five-year bonds may yield 260 basis points, or 2.6 percentage points, above U.S. Treasuries, while the $1.3 billion of 10-year notes may yield 305 basis points more than Treasuries, the person said. The $850 million of 30-year notes may carry a spread of 350 basis points. Bank of America Corp. and Morgan Stanley are helping to manage the sale.

Pemex’s notes will yield 68 basis points over a reference known as the midswaps rate, one of the people said. BNP Paribas SA and Credit Agricole SA are managing the transaction.

Ecopetrol, which is 88.5 percent owned by the Colombian government, had refrained from seeking overseas debt financing this year as Finance Minister Mauricio Cardenas said that borrowing dollars and converting them into pesos would undercut the government’s effort to weaken the currency. Cardenas sits on the company’s nine-member board as one of three government representatives.

To contact the reporters on this story: Veronica Navarro Espinosa in New York at vespinosa@bloomberg.net; Katia Porzecanski in New York at kporzecansk1@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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