Fitch Affirms Ecopetrol’s Investment-Grade Rating Days After Agency Issued Warning for Colombia’s Sovereign Rating
Just days after downgrading Colombia’s local currency ratings and putting the nation on negative watch, Fitch Ratings has affirmed the investment-grade rating of the nation’s largest oil company. Today, Fitch maintained its BBB rating for the state-controlled Ecopetrol‘s long-term foreign-currency issuer default rating (IDR), although the agency did change its outlook from stable to negative.
The fiscal issues affecting the nation as a whole mean that Ecopetrol was not spared from a downgrade to its long-term local-currency IDR, however, which was dropped to BBB from BBB+ and assigned a stable outlook.
The rationale for the ratings actions is simple: Ecopetrol remains tied to its largest shareholder. “The credit quality of these sovereign-owned entities is linked to those of their sovereigns given their strategic importance for the countries they operate within,” said Fitch in a statement.
The Colombian peso has also taken a tumble since Fitch changed is outlook on the nation’s ratings. The currency was sitting at 2,950 to $1 USD before the ratings change was announced and has since slid to 3,062 to $1. This marks the first time the peso has gone above 3,000 to $1 since July 7. This, alongside falling oil prices, means that Ecopetrol, which recently took full control over the lucrative Campo Rubiales field in central Colombia, will continue facing an array of headwinds for the foreseeable future.
Today, Ecopetrol also announced the appointment of a new secretary general. Mónica Jiménez González, a graduate of the Universidad de los Andes in Bogotá, will work in governance while providing legal advice to the company’s top management and addressing corporate communications.
Photo Credit: Ecopetrol