Ecopetrol S.A. priced $2 billion in bonds to refinance debt from its purchase of a controlling stake in Brazil’s Brava Energia S.A. and redeem older notes.
The Colombian energy company said the new notes carry a 7.875% coupon, paid twice yearly, and mature Nov. 12, 2034. They were priced at 99.388% of face value, producing a 7.980% yield. Settlement is expected Nov. 12, subject to closing conditions.
Ecopetrol plans to use the net proceeds to repay in full the loan used for the Brava deal and redeem $810 million of its 8.625% notes due in 2029. The company said the refinancing would replace existing liabilities without increasing its total debt.
In a Nov. 9 preliminary prospectus filed with the SEC, Ecopetrol said it acquired an approximately 51% controlling voting interest in Brava on Aug. 17 for about 5.6 billion Brazilian reais. The filing describes a bridge facility of up to $1.19 billion arranged to finance the purchase.
The repayment plan is broader than the one in that preliminary filing, which contemplated paying back only part of the bridge loan and redeeming up to $720 million of the 2029 notes. Ecopetrol set out the larger redemption amount and full loan repayment in its pricing announcement.
Ecopetrol’s prospectus also discloses that affiliates of some underwriters lent under the bridge facility and may receive proceeds when it is repaid. The filing says those underwriters would be deemed to have a conflict of interest under Financial Industry Regulatory Authority Rule 5121. It names BofA Securities, Inc. as the qualified independent underwriter.
Ecopetrol said orders for the new bonds reached about $6.93 billion at their peak, roughly 3.5 times the amount offered. The company reported interest from more than 235 investors.
Ecopetrol has scheduled the 2029-note redemption for Nov. 19, when it said it would announce the final amount to be redeemed.
