S&P rates Ecopetrol notes BBB

Standard & Poor's said it assigned its BBB foreign currency rating to Ecopetrol SA's (BBB/stable/--) proposed senior unsecured notes for up to $1.5 billion due 2025.

The company will use the proceeds mainly to fund its capital expenditures (capex) and for general corporate purposes.

S&P said the rating is based on its expectation that the ratio of priority liabilities to total assets will remain below 20%, allowing for no structural subordination of the notes.

The agency also believes that, along with the company's diversity of assets, some upstream guarantees mitigate the structural subordination, as the proceeds from the bond will be downstreamed to its subsidiaries to fund capex.

In addition, due to Ecopetrol's status as a government-related entity, S&P believes that its subsidiaries will benefit from the extraordinary government support.

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