Ecopetrol Launches $1.75 Billion Bond Sale to Fund Buyback

Colombia’s state oil company launched a $1.75 billion deal on international debt markets while moving to buy back bonds for the second time this year.

Ecopetrol SA is selling dollar notes due in about seven years to help fund the repurchase of existing bonds maturing in 2026 and prepay loans. The new debt was expected to price Tuesday and yield around 7.65 percent, according to person familiar with the matter who asked not to be named. 

Fitch Ratings rated the bonds BB+, one notch below investment grade. The company’s American depositary receipts closed 4.3 percent lower in New York trading, while the bonds due in 2026 rose after the announcement was made in a regulatory filing, according to indicative pricing compiled by Bloomberg.

Ecopetrol last sold overseas bonds in January, raising $1.85 billion to help fund the purchase of debt with a shorter maturity.  

The offers come as the state-controlled driller invests heavily in offshore exploration while the Andean nation struggles to plug a natural gas shortfall expected to start next year.  

Equity analysts questioned Ecopetrol’s decision earlier this year to pull out of a $3.6 billion deal to buy a stake in Texas shale-oil assets from Occidental Petroleum Corp. The move prompted two members of its board to quit. 

The buyback offer expires on Oct. 15 at 5 p.m. New York time. BBVA Securities Inc., JPMorgan Securities and Santander US Capital Markets are managing the new deal.