Colombia’s state-controlled petroleum giant Ecopetrol S.A. (BVC: ECOPETROL; NYSE: EC) informs that, as part of its debt management strategy and refinancing of 2023 maturities, it entered into a $1billion credit agreement with The Bank of Nova Scotia, who put up $700 million USD and Sumitomo Mitsui Banking Corporation, who put in $300 million USD.
The loan has a term of five years commencing on the signing date, subject to two conditions: First, the principal is amortizable in four equal semiannual installments during the last two years of the term of the agreement, and second, a variable interest rate of SOFR + 210 basis points is payable semiannually.
Ecopetrol says the loan will primarily be used to pay existing debt.
The contract was authorized by the Ministry of Finance and Public Credit (Minhacienda) through resolution 3373 of December 19, 2022, within the framework of a request submitted by Ecopetrol to execute an external public debt management operation:
- For the substitution of the current nominal amount of $665 million USD under the non-revolving committed line entered on September 20, 2018 with Mizuho Bank Ltd., The Bank of Nova Scotia and Banco Sabadell, which was authorized by the MHCP pursuant to Resolution No. 2733 of September 04, 2018; and,
- To make payments on the principal maturities of the Cartagena Refinery loans assumed by the company, authorized by the MHCP pursuant to Resolution No. 4112 of December 7, 2017.
To obtain the loan, Ecopetrol says that it complied with all the required internal and external procedures and approvals, and that it believes the conditions obtained illustrate confidence of the international financial sector in the company and its proactive management of the 2023 debt maturities.