The ratings are supported by Promigas’s strong business position in the natural gas transportation and distribution sectors in Colombia. These segments are regulated and function as natural monopolies, contributing to stable and predictable cash flows that mitigate re-contracting risk.

Fitch withdrew the ‘AAA(col)’ rating for the Surtidora de Gas del Caribe S.A. E.S.P. (Surtigas) local bond issuance of $330 billion COP from 2024 due to its expiration.

Key Rating Drivers

Solid Business Position

Promigas’s ratings reflect a low business risk profile, stemming from stable and predictable cash flow generation and a strong competitive position. Promigas is the second-largest natural gas transporter in Colombia, serving the Caribbean coast region. Its 3,290 kilometers of pipelines account for approximately 46% of the national network. The company is also a significant player in natural gas distribution, reaching about 38% of connected users nationwide through subsidiaries and non-controlled holdings.

Promigas’s 51% stake in Sociedad Portuaria El Cayao S.A. E.S.P. (SPEC), a liquefied natural gas (LNG) terminal, provides added flexibility to supply imported natural gas to thermoelectric plants along the coast, bolstering its capacity to meet demand fluctuations. The country ceiling applicable to Promigas is determined by Peru’s ‘A-‘ rating, as the EBITDA generated by its Peruvian subsidiaries and dividends from its 40% stake in Gas Natural de Lima y Callao S.A. (Cálidda) (BVL: CALIDDA) (IDR ‘BBB’ Stable Outlook) are sufficient to cover consolidated foreign currency interest payments.

Promigas’s cash flow is supported by operations diversified across natural gas transportation, distribution, and electric power distribution. The transportation segment, which accounts for 52.4% of consolidated EBITDA, is backed by medium-term take-or-pay contracts with capacity payments exceeding 80%, reducing volumetric risk. The gas distribution segment, contributing 30% of EBITDA, operates under a regulatory framework with low demand volatility and solid cash flows. Cash flow stability is further enhanced by dividends from non-controlled companies, which average $245 billion COP annually. The projected growth of the Peruvian market is expected to increase its share of gas distribution EBITDA from 21% to 47% over the next three years.

Recent regulatory changes aimed at increasing gas supply flexibility are credit-neutral for Promigas. The new framework allows for greater flexibility in supply contract renewal periods, facilitating shorter-term renewals, which affects transportation contract renewals in the sector. The impact on Promigas’s average contract duration remains limited, as the company maintains an average term of six years. Contractual conditions are stable, supported by Promigas’s role as critical infrastructure for the country’s gas import and transport, which supports contract renewal expectations.

Negative Free Cash Flow

Promigas’s free cash flow (FCF) is expected to remain negative in the short and medium term, continuing a five-year trend of structurally negative FCF. This is attributed to high working capital requirements in its financial services segment, high capital expenditures (capex), and consistent dividend distribution. Fluctuations in working capital, stemming from financing the non-bank financial services business and delays in subsidy payments, require significant cash resources and limit operating cash flow (OCF) available for investment. Promigas’s participation in strategic projects, such as pipeline bidirectionality, infrastructure expansion, and alternative pipeline enablement under the national supply plan, will maintain high investment requirements. Consolidated capex from 2025 to 2029 is projected at $5.6 trillion COP, with 61% allocated to transportation.

Fitch’s base case projects that gross leverage, unadjusted for financial services, will remain near 4.3x, and adjusted leverage at 4x in the coming years, leaving limited room relative to rating sensitivities. In 2024, unadjusted leverage reached 4.2x and adjusted leverage was 3.9x, supported by strong cash generation from thermoelectric demand. Fitch’s base case does not include the tariff modification planned for 2027.

To ensure comparability with other rated issuers, Fitch adjusts reported debt and EBITDA to reflect the operations of the financial services program Brilla and estimates a capital allocation for this segment, considering its risk profile. An increase in the delinquency of the loan portfolio managed by gas distributors has required additional debt resources, putting pressure on credit metrics.

Gases de Occidente S.A. E.S.P. (GDO) and Surtigas, both rated ‘AAA(col)’, have the highest independent national ratings and do not receive benefits from their parent company, Promigas. Their ratings are supported by strong business profiles, stable operational generation, low demand variability, and regulated tariffs. Fitch projects that GDO’s consolidated leverage will remain below 4x, with adjusted leverage around 2.5x. For Surtigas, leverage is expected to peak at 4.3x in 2025 due to higher working capital needs. Both companies maintain adequate liquidity, supported by available cash, predictable operations, and reliable market access.

Peer Analysis

Promigas maintains a credit profile consistent with its investment-grade rating. Its low business risk reflects its participation in regulated businesses and its strong position in the natural gas transportation and distribution sectors in Colombia.

Promigas’s ‘BBB-‘ IDRs are one notch below those of Transportadora de Gas Internacional S.A. E.S.P. (TGI) (BBB Negative Outlook) and Cálidda (BBB Stable Outlook). These companies benefit from more conservative capital structures and operate in countries with similar operational environments, such as Colombia and Peru.

Promigas’s credit profile is positioned between that of other operational holding companies in Colombia, such as Empresas Públicas de Medellín S.A. E.S.P. (EPM) (BB+ Negative Outlook) and Grupo Energía Bogotá S.A. E.S.P. (GEB) (BBB Negative Outlook). Promigas’s IDR is one notch below GEB’s due to its lower business and geographical diversification and structurally negative FCF generation, which results in higher leverage levels than GEB’s in the medium term.

The rating actions were based on a review conducted on August 21, 2025, with committee members Natalia O’Byrne (chair), Gustavo Mueller, and Adriana Eraso. The credit rating opinion provided by Fitch Ratings Colombia S.A. Sociedad Calificadora de Valores is a professional assessment and does not constitute a recommendation to buy, sell, or hold a security, nor does it guarantee the fulfillment of the rated entity’s obligations.

Promigas. Photo credit: Promigas/Facebook.

Included among those that the big three rating agency has put on a negative outlook are Bancolombia, Banco de Bogotá, Seguros Generales Suramericana (SGS), Seguros de Vida Suramericana S.A. (SVS), and Compañía Aseguradora de Fianzas S.A. Confianza (Confianza).

While the Colombian government maintains a willingness to support Bancolombia and Banco de Bogotá, “its capacity to provide support is reflected by its rating,” stated Moody’s.

While the New York-based agency noted that the Colombian government maintains a willingness to support Bancolombia and Banco de Bogotá, “its capacity to provide support is reflected by its rating,” stated Moody’s.

“The affected banks’ long-term deposit and senior unsecured debt ratings of Baa2 are positioned at the same level of sovereign bond rating as Moody’s assesses a very high probability that the government will support them if needed,” added the agency. “This assessment considers the very large deposit franchises of the affected banks, which are the two largest in Colombia, with deposit market shares ranging of 12.9% (Banco de Bogota) and 23.2% (Bancolombia) as of September 2017.”

The outlooks for Grupo Aval Acciones y Valores S.A. and Grupo Aval Limited (the controlling companies tied to Banco de Bogotá) have been unaffected.

Regarding the insurers, Moody’s said in a statement that “the change to a negative outlook on SGS’ and SVS’ ratings addresses the likelihood that — were it to ultimately occur — a downgrade of Colombia’s sovereign bond rating could lead to a rating downgrade for SGS and SVS, primarily taking into account the correlation between the companies’ credit profiles and that of the Colombian sovereign, given their direct and indirect exposures to sovereign assets, and the fact that the insurers’ ratings are currently positioned at the sovereign rating level.”

Three infrastructure issuers also suffered the same outlook change to negative: Interconexion Electrica S.A. E.S.P. (which has a Baa2 rating, now with a negative outlook), Empresas Publicas de Medellín S.A. E.S.P. (Baa2, negative), and Enel Americas S.A. (Baa3, negative).

READ MORE: Moody’s Drops Credit Rating for Colombia to Negative from Stable

The fallout has not affected Ecopetrol S.A., however. Moody’s has maintained its Baa3 rating and stable outlook for state-controlled oil company

The Bogotá-based hydrocarbon giant highlighted the news, saying in a statement that the change for the nation’s outlook “had no effect on the company’s credit rating, as it anticipates continuously improving fundamental performance.”

Ecopetrol announced this week that it made a net profit of 6.6 trillion pesos in 2017, its best results since 2013 and more than four times its reported profit in 2016. In 2017, it also extended its reserve life to 7.1 years and hit output goals of 715,000 barrels of oil equivalent per day, a level it expects to at least match this year amid up to $4 billion USD in investment in exploration and production.