Ecopetrol SA, 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.