Research: Rating Action: Moody’s confirms Baa3 ratings for Ecopetrol and lowers its BCA to ba3; the outlook remains negative

New York, August 24, 2022 — Moody’s Investors Service (“Moody’s”) has affirmed Ecopetrol SA’s (“Ecopetrol”) senior unsecured Baa3 ratings. Simultaneously, Moody’s downgraded Ecopetrol’s Base Credit Rating (BCA) from ba3 to ba1 due to the company’s high refinancing risk, reflecting aggressive financial policy amid high global geopolitical risk and market volatility. commodity prices, as well as a weaker government policy framework. The ratings outlook remains negative.


..Issuer: Ecopetrol SA

…. Issuer rating, Baa3 confirmed

….Senior Regular Unsecured Bond/Debenture, Confirmed Baa3


..Issuer: Ecopetrol SA

…. Basic credit rating, downgraded to ba3 from ba1

Outlook Actions:

..Issuer: Ecopetrol SA

….Outlook, remains negative


The downgrade of Ecopetrol’s core credit rating (a measure of the company’s intrinsic credit risk without supporting considerations) to ba3 from ba1 was primarily based on the extended time the company took to refinance near of $5.1 billion in debt maturing in September 2023. BCA’s downgrade also took into account the new government’s energy and environmental priorities, which may include changes such as i. restrictions on exploration and production based on hydraulic fracturing in Colombia; ii. limitations on new oil exploration concessions or permits; and iii. new taxes on the oil and gas industry, in line with the tax reform proposal.

Ecopetrol’s Baa3 ratings continue to reflect the company’s status as Colombia’s leading oil and gas producer, accounting for more than 60% of the country’s production and nearly 100% of petroleum product supply, as well as its significant power transmission business in Colombia and other countries. in Latin America. In addition, Moody’s assumes a high probability of support from the Colombian government (Baa2 stable) and a moderate default dependency between the two entities; this assessment results in a three-notch increase in Ecopetrol’s senior unsecured rating to Baa3 from its ba3 BCA.

Ecopetrol’s refinancing risk is high but manageable. Robust oil and gas prices have helped Ecopetrol’s cash generation in 2021-22. For 2023-2024, Moody’s estimates that, based on an estimated average Brent price of $68 to $58 per barrel, the company’s cash flow will decline from 2022 levels. However, despite price volatility commodities, Moody’s estimates the company will be able to meet its financial obligations in 2023 supported by i. access to global and Colombian capital markets, ii. its $1.2 billion committed bank credit facility available through August 2023; and iii. government support. Ecopetrol’s Baa3 ratings also take into account the strong and relatively stable cash flows of its electricity transmission company, Interconexion Electrica SAESP (ISA, Baa2 stable) and its midstream subsidiary, Cenit SAS, which includes Oleoducto Central SA ( Baa3 stable).

The negative rating outlook is based on Moody’s view that Ecopetrol’s refinancing risk may remain elevated over the coming months for a Baa3 rating category.


Ecopetrol’s rating outlook would be stabilized if the company were able to timely refinance upcoming debt maturities. In turn, an upgrade to Ecopetrol’s ba3 BCA or Baa3 rating is unlikely over the next 12 months given the negative rating outlook. However, if the company manages to strengthen its financial policies and simultaneously demonstrates its ability to reduce its financial leverage while increasing its production and keeping the life of proven reserves stable, its rating could be improved. Specifically, its rating could be improved if the company’s full-cycle leverage ratio remained at 1.5x, indicating stable research and development costs, and retained cash flow/net debt should be higher. at 40% and the Colombian government’s rating would have been maintained at Baa2 because, according to Moody’s, it is unlikely that Ecopetrol will be rated above the sovereign rating.

A rating downgrade could occur if Ecopetrol faces liquidity constraints; if the life of its reserve decreases significantly and permanently; or if retained cash flow/net debt declines to around 20%. Additionally, since Ecopetrol’s ratings have implicit support from the Colombian government, negative action on the government’s rating or change in Moody’s assumptions about government support could result in negative action on the ratings. ‘Ecopetrol.

The methodologies used in these ratings were the Integrated Oil and Gas Methodology published in September 2019 and available at Government-Related Issuers Methodology published in February 2020 and available at Otherwise, please see the Scoring Methodologies page on for a copy of these methodologies.

Ecopetrol, 88.5% owned by the Colombian government, is the largest oil and gas company and company in the country, with upstream, midstream and downstream operations. Through ISA, Ecopetrol participates in the transmission of energy, the management of real-time systems (XM) and a motorway concession. Internationally, Ecopetrol holds interests in strategic basins on the American continent, with drilling and exploration operations in the United States (Permian Basin and Gulf of Mexico), Brazil and Mexico and, through ISA and its subsidiaries, Ecopetrol holds leading positions in electricity transmission activities in Brazil, Chile, Peru and Bolivia, road concessions in Chile and the telecommunications sector. Its gross oil and gas production averaged nearly 624 Mboe in 2021, according to Moody’s calculations, and its total assets stood at $63.7 billion as of June 30, 2022.


For details on key rating assumptions and Moody’s sensitivity analysis, see the Methodological Assumptions and Sensitivity to Assumptions sections in the Disclosure Form. Moody’s rating symbols and definitions can be found at

For ratings issued on a program, series, category/class of debt or security, this announcement provides certain regulatory information regarding each rating of a subsequently issued bond or note of the same series, category/class of debt, security or under a program for which ratings are derived exclusively from existing ratings in accordance with Moody’s rating practices. For ratings issued on a media provider, this announcement provides certain regulatory information relating to the credit rating action on the media provider and each particular credit rating action for securities whose credit ratings are derived from the support provider’s credit rating. For the provisional ratings, this press release provides certain regulatory information relating to the provisional rating assigned, and to a final rating that may be assigned after the final issuance of the debt, in each case where the structure and conditions of the transaction n have not changed prior to the final rating being assigned in a way that would have affected the rating. For more information, please see the issuer/transaction page of the respective issuer at

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About Charles D. Goolsby

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