Moody's rates Ecopetrol notes Baa2

Moody's Investors Service said it assigned a Baa2 foreign-currency rating to Ecopetrol SA's proposed $1.5 billion of proposed notes due 2044. The outlook is stable.

Proceeds from the notes will be used primarily to fund capital expenditures.

The agency said Ecopetrol's Baa2 global local-currency issuer rating and foreign-currency long-term senior debt rating reflect its status as Colombia's leading oil and gas producer, accounting for about two-thirds of the country's production, with a growing production, reserves and crude oil export profile. The rating derives one notch of uplift based on a high level of government support and moderate default correlation.

Ecopetrol's stable outlook incorporates rising financial leverage over the next two to three years as spending is expected to exceed internal cash flow, the agency said, but growing production and strong oil-based cash margins are expected to support internal cash flow.

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