Bylaw rewrite would clear the way for a mostly new nine-member board

Ecopetrol S.A. (BVC: ECOPETROL; NYSE: EC) will hold an extraordinary shareholders’ meeting on September 15, 2026, at which the Colombian government, acting through the Ministerio de Hacienda y Crédito Público (Ministry of Finance and Public Credit) as holder of 88.49% of the company’s shares, intends to elect a new nine-member board of directors and amend the bylaw that has limited how many sitting directors can be replaced in a single vote.

Ecopetrol reported on August 28 that all corporate procedures required to formalize the Nation’s slate of candidates have been completed and that the slate will be put to shareholders at the meeting. The government’s request arrived in a letter dated August 26 from Finance Minister Miguel Gómez Martínez to Juan Carlos Hurtado Parra as Ecopetrol’s acting president, answering communications the company sent on August 4, 10 and 14 reporting director resignations and asking that an assembly be convened to fill the vacancies.

Three of the board’s nine seats have been empty since July 31. According to the ministry’s letter, Juan Gonzalo Castaño Valderrama resigned as a non-independent director on May 12, 2026, and Ángela María Robledo Gómez, who chaired the board, and Lilia Tatiana Roa Avendaño resigned effective July 31. The letter also notes that Ricardo Roa Barragán remained at the head of the company through July 30 and that Hurtado Parra has held the acting presidency since July 31, one week before President Abelardo de la Espriella was inaugurated on August 7. Hurtado Parra, the company’s executive vice president of hydrocarbons, had already been running Ecopetrol on an interim basis since April 7, the day after the board approved Roa’s request for vacation followed by unpaid leave, according to Portafolio. Roa’s exit followed months of controversy, including the leak in March of an internal report pointing to a possible $42 million USD payment to a company in the British Virgin Islands.

The first substantive item on the agenda is a reform of Article 20 of Ecopetrol’s bylaws. The current text requires that any slate presented to the assembly include at least three sitting directors, not counting the candidates for seats eight and nine. The ministry proposes replacing that requirement with language under which the slate “will seek to” retain at least three current members, without making it a condition of the slate’s validity or a bar to a full renewal of the board. A second change to the same article would allow the Nation to renominate the employee representative already elected for the current period without repeating the employee vote.

The ministry argues that the existing rule makes the composition and validity of a slate depend on whether a set number of directors agree to be renominated, so that a decision belonging to shareholders is conditioned on the individual will of the administrators themselves, which it describes as an unjustified risk of blocking the electoral process. “The continuity of current members would remain a relevant corporate governance criterion, but not an absolute condition that could prevent the recomposition of the body when the company’s circumstances, the vacancies that have arisen or the profiles required call for its renewal,” Gómez Martínez wrote.

Shareholders will then elect all nine directors by the electoral quotient system for the remainder of the 2025–2029 institutional period. Six of the nine names on the Nation’s slate are new to the board: Carlos Augusto Suárez Rojas, Jorge Alberto Jaller Jaramillo, José Camilo Manzur Jattin, Ludmila del Carmen Vergara Rosales, Betzy Patricia Martínez Zapatero and Claudia Margarita Lafaurie Taboada.

According to the candidate profiles Ecopetrol published, Suárez Rojas is a lawyer who founded and heads Estrategia & Poder and previously served as secretary general and operations director of the Contraloría General de Cundinamarca (Cundinamarca comptroller’s office); El Tiempo describes him as the president’s political communications strategist. Jaller Jaramillo was vice president of retail and vice president of Éxito and Carulla at Almacenes Éxito S.A., which trades as Grupo Éxito (BVC: EXITO). Manzur Jattin has been president of the Asociación Colombiana de Distribuidores de Energía Eléctrica (Colombian Association of Electric Power Distributors, Asocodis) since 2006 and previously served as an expert commissioner of the Comisión de Regulación de Energía y Gas (Energy and Gas Regulatory Commission, CREG). Vergara Rosales was named head of the Superintendencia de Transporte (Superintendency of Transportation), the agency announced on August 14. Martínez Zapatero is a lawyer who has held several public-sector advisory posts and currently manages the Fundación Sé Valiente. Lafaurie Taboada is a former head legal adviser and vice president of hydrocarbon contracts at the Agencia Nacional de Hidrocarburos (National Hydrocarbons Agency, ANH) and is now legal vice president of CNE Oil & Gas. El Tiempo also reported that Jorge Mario Velásquez, the former president of Grupo Argos (BVC: GRUPOARGOS) whom de la Espriella had named in July as a prospective director, was left off the slate.

The remaining three seats are filled under procedures set out in Article 20 rather than chosen directly by the ministry. Seat seven belongs to a representative elected by Ecopetrol’s employees; the company reports that César Eduardo Loza Arenas, a former president of the Unión Sindical Obrera (Workers’ Trade Union, USO), was previously elected under that procedure and has been nominated again. For seat eight, the governors of the hydrocarbon-producing departments where Ecopetrol operates reaffirmed Ricardo Rodríguez Yee in a communication received August 26. For seat nine, the minority shareholders with the largest holdings reaffirmed Luis Felipe Henao Cardona, the board’s current chairman and a former housing minister, in a communication received August 21.

The agenda also asks shareholders to instruct the board, including the one elected at the meeting, to bring the company’s director succession policy into line with the amended Article 20 and provides that any internal rule still requiring a minimum number of continuing directors will not apply to this election. Ecopetrol stated that its board and Corporate Governance and Sustainability Committee completed the verification of all candidates, so no dispensation from the succession policy’s review procedures will be needed.

The board reshuffle is unfolding alongside a turnover in senior management. At its August 31 meeting, Ecopetrol’s board accepted the departure of Sergio Andrés Moreno Acevedo as corporate vice president of science, technology and innovation and named Diana Marcela Acero Rojas, who manages that portfolio, to the post on an acting basis from September 1. The same meeting formalized the appointment of Henryk Manuel Porras Villamil, until then a project leader in the energy transition projects department, as acting executive vice president of energy transition from August 31, succeeding Ernesto Alfonso Gómez Cabarcas, who had held the job on an interim basis through August 30 and will take statutory leave before pursuing other opportunities. The company said permanent appointments will be disclosed when made.

Four days earlier, at its August 27 meeting, the board had approved five other interim replacements covering the vice presidencies of territorial transformation and health, safety and environment; administration and services; strategy and new business; and refining and industrial processes, as well as the corporate directorate of institutional relations and communications, with outgoing executives leaving August 30 and internal replacements taking over the next day. La República also reported management changes at the Ecopetrol subsidiary Hocol, where general manager Luis Eduardo Parra left on August 25.

Ahead of the vote, Ecopetrol published the measures it will apply to shareholder representation, as required by the Circular Básica Jurídica (Basic Legal Circular) of the Superintendencia Financiera de Colombia (Financial Superintendency of Colombia). Proxies that do not meet the legal minimums or that fail to name the representative will be rejected, and none may be granted to Ecopetrol employees or to anyone tied to its management. Managers and employees are barred from suggesting proxy names, recommending a vote for any slate, or coordinating with shareholders on proposals or votes; the Corporate Legal Vice Presidency and the General Secretariat will review the powers of attorney.

The meeting is scheduled for 11 a.m. at Ecopetrol’s main building at Carrera 13 No. 36-24 in Bogotá, in person and streamed live on the company’s website, according to the convocation notice the company published on August 28. Registration of shareholders and proxies opens at 9 a.m. Meeting documents, candidate profiles and acceptance letters are posted on the company’s investor site.

Ecopetrol says it accounts for more than 60% of Colombia’s hydrocarbon production and holds 51.4% of the power transmission company ISA (BVC: ISA). Finance Colombia reported in May that the company’s first-quarter results were weighed down by lower crude prices and reduced output even as refining margins recovered.

Headline image: The six new nominees on the Nation’s slate for the Ecopetrol board, to be voted on September 15. (Photos courtesy Ecopetrol; composite: Finance Colombia)

The appreciation of the Colombian peso occurred despite the concurrent decline in international oil prices and relative stability of the US dollar (USD) globally.

A primary factor contributing to the peso’s strength was the monetization of resources executed by the Ministry of Finance and Public Credit. According to data cited from Bloomberg L.P., the government monetized approximately $1.7 billion USD in September, with the capital originating from Total Return Swap (TRS) operations. The majority of this monetization reportedly occurred during the week of September 22.

The foreign exchange inflows correlated with elevated trading activity. Several sessions recorded high transaction volumes. On September 23, traded volume reached $2.3 billion USD, a figure only surpassed by the volume recorded on March 3, 2022. Throughout the month, the USDCOP exchange rate fluctuated between $3,830 COP and $4,047 COP, concluding the month at $3,917 COP, a decrease of $98.92 COP from the August closing level. Analysis of the market indicated that the Relative Strength Index (RSI) remained in oversold territory during multiple sessions. Data on the USDCOP performance was sourced from SET-ICAP, a local trading platform.

Monetary policy adjustments in the United States and the stability of rates in Colombia defined the global and domestic interest rate landscape for the month.

The  USFederal Reserve System (Fed) resumed its monetary easing strategy at the September 17 meeting of the Federal Open Market Committee (FOMC). The FOMC reduced the federal funds rate range by 25 basis points (bp), setting the new target at 4.00%-4.25%. The decision marked the first rate cut since December 2024 and was attributed mainly to evidence of deceleration in the labor market. Individual projections released via the Fed’s dot plot indicated expectations for two additional rate cuts before the close of 2025, followed by one more in 2026, which would situate the federal funds rate range between 3.25% and 3.50% next year. Fed Chair Jerome Powell adopted a cautious stance regarding the prospect of future monetary easing.

In contrast, the Central Bank of Colombia (Banco de la República) maintained the repo rate at 9.25%. Current market consensus does not project additional rate cuts for the remainder of the year.

Analysts forecast the USDCOP exchange rate to trade within a range of $3,850 COP and $4,050 COP throughout October. This projection is reportedly based on anticipated continued global weakness of the US dollar, the cautious policy posture of the Banco de la República, and continued adjustments in capital flow dynamics.

Colombian Peso. Photo credit: Mano Chandra Dhas.

The purchasing banks are Banco Bilbao Vizcaya Argentaria, S.A. (NYSE: BBVA, BME: BBVA), Banco Santander, S.A. (NYSE: SAN, BME: SAN), BNP Paribas Securities Corp., a subsidiary of BNP Paribas (EPA: BNP), Citigroup Global Markets Inc., a subsidiary of Citigroup Inc. (NYSE: C), Goldman Sachs & Co. LLC, a subsidiary of The Goldman Sachs Group, Inc. (NYSE: GS), and J.P. Morgan Securities plc, a subsidiary of JPMorgan Chase & Co. (NYSE: JPM).

The Tender Offer’s Framework

The offer targets a dozen outstanding series of Colombia’s global bonds with maturities spanning from 2027 to 2061. The purchasers will pay a fixed cash price for each series, plus any accrued and unpaid interest up to the settlement date.

While the offer is for a broad range of securities, the total amount to be paid for the tendered bonds, referred to as the “Maximum Purchase Price,” remains at the sole discretion of the purchasers. If the total value of tendered bonds for any given series exceeds the determined maximum, a proration factor will be applied. This structure provides the syndicate and, by extension, the Republic of Colombia, significant flexibility in managing the scale and scope of the buyback.

The specific bonds and their respective purchase prices per $1,000 of principal amount are detailed below:

Strategic Rationale and Total Return Swap Structure

The offer document explicitly states that the transaction’s primary purpose is for the purchasing banks to acquire the bonds to hedge potential obligations under total return swap (TRS) transactions expected to be executed with the Republic of Colombia.

This arrangement suggests that Colombia is entering into agreements with the banks where it will receive the total return (interest payments plus capital appreciation/depreciation) on its own debt, effectively neutralizing its exposure to those specific bonds. In return, Colombia would likely pay the banks a floating rate, such as SOFR, plus a spread. For the banks to hedge their position in this swap—where they are paying out the bonds’ total return—they must physically hold the underlying assets. This tender offer serves as the mechanism for the banks to acquire the necessary bonds from the market.

This structure allows the Ministry of Finance and Public Credit to synthetically manage its debt profile, potentially reducing interest rate risk or altering its maturity schedule without immediately retiring the debt from its balance sheet. At the maturity of the swaps, the banks are expected to deliver the bonds to the republic, at which point the debt would be formally extinguished.

Key Terms and Timeline for Investors

For bondholders considering the offer, the key dates are as follows:

• Expiration Time: The offer will expire at 5:00 p.m., New York City time, on Wednesday, September 3, 2025. This is also the deadline for withdrawing any tendered bonds.
• Announcement of Results: The purchasers expect to announce the aggregate principal amount of accepted bonds and any proration factors on Thursday, September 4, 2025.
• Settlement Date: The transaction is scheduled to settle on Monday, September 8, 2025.

Tenders must be submitted in principal amounts equal to the minimum authorized denominations, which is $200,000 for most series ($100,000 for the 6.125% bonds due 2041) and integral multiples of $1,000 in excess thereof. The process must be conducted through DTC, Euroclear, or Clearstream.

The offer’s primary condition is the successful execution of the TRS agreements between the purchasers and Colombia. It is important to note that the purchasing banks are severally, not jointly, liable. Each bank is only responsible for its own accepted portion of the tender.

The depositary and information agent for the offer is Global Bondholder Services Corporation.

US Dollars. Photo credit: Mano Chandra Dhas.

The offer, detailed in an official document dated August 4, 2025, allows registered holders and beneficial owners of these bonds to tender them for purchase. The maximum amount of bonds to be purchased will be determined by Colombia at its discretion.

The purchase price for each series of bonds is a fixed amount per $1,000 USD of principal, as specified in the offer. In addition to the purchase price, investors whose bonds are accepted will receive accrued and unpaid interest up to, but not including, the settlement date.

The specific bonds included in the offer are as follows:

• 3.000% Global Bonds due 2030
• 3.125% Global Bonds due 2031
• 3.250% Global Bonds due 2032
• 6.125% Global Bonds due 2041
• 4.125% Global Bonds due 2042
• 5.625% Global Bonds due 2044
• 5.000% Global Bonds due 2045
• 5.200% Global Bonds due 2049
• 4.125% Global Bonds due 2051
• 3.875% Global Bonds due 2061

Should the total value of tendered bonds of a particular series exceed the maximum purchase price set by the government for that series, a proration factor will be applied. The offer is not contingent on a minimum participation level for any of the bond series.

The tender offer commenced at approximately 8:00 a.m. New York time on Monday, August 4, 2025, and is scheduled to expire at 5:00 p.m. New York City time on Friday, August 8, 2025, unless extended. The settlement date for the accepted tenders is expected to be Thursday, August 14, 2025.

Colombia has stated its intention to announce key details of the tender results at or around 8:00 a.m. New York City time on Monday, August 11, 2025. This announcement is expected to include the maximum purchase price for each series, the aggregate principal amount of tenders accepted for each series, and any applicable proration.

Bondholders wishing to participate must submit their tenders through a direct participant in either The Depository Trust Company (DTC), Euroclear Bank SA/NV, or Clearstream Banking, S.A. The government has not provided a letter of transmittal or guaranteed delivery procedures for this offer.

Citigroup Global Markets Inc. (NYSE: C) is acting as the dealer manager for the offer. Global Bondholder Services Corporation is serving as the tender and information agent. Documentation for the offer can be obtained from Global Bondholder Services Corporation’s website or by contacting them directly. Questions regarding the offer can be directed to the dealer manager.

US Dollars. Photo credit: Mano Chandra Dhas.

The vote, taken during the board’s July meeting, was split 4-3, mirroring the division seen in June. Four members voted to hold the rate, while two favored a 50-basis-point reduction, and one advocated for a smaller 25-basis-point cut.

According to an analysis released by Bancolombia (BCOLO: BVC), the country’s largest commercial bank, the central bank’s cautious stance is rooted in “the complexity of external financing conditions, heightened uncertainty from global trade tensions, and the slow pace of monetary policy normalization in the US.”

Inflation Easing but Expectations Remain High

The board acknowledged the continued downward trajectory of inflation. The latest data from the National Administrative Department of Statistics (DANE) showed that the annual inflation rate fell by 23 basis points to 4.82% in June, the lowest level recorded since 2021. This deceleration was primarily driven by decreases in food and regulated prices.

However, core inflation, which excludes volatile food and energy prices, remains a sticking point. Core inflation held steady at 4.79%, and short-term inflation expectations, while stable compared to the previous month, are still above the central bank’s target range of 2% to 4%. Year-end inflation expectations for 2025 currently stand at 4.8%, with 12-month expectations rising slightly to 3.90%.

Fiscal Policy Concerns Weigh on Monetary Decisions

While not explicitly mentioned in the central bank’s official statement, Bancolombia’s analysis points to a significant underlying factor: the fiscal outlook. The investment bank noted that the central bank has “repeatedly warned about the impact of the fiscal situation on monetary policy.”

These concerns have been amplified by the recent presentation of the proposed 2026 national budget by the Ministry of Finance and Public Credit. The budget calls for a 6.5% increase in spending over the 2025 budget, reaching a total of $556.9 trillion COP. According to Bancolombia, this suggests an increase in primary spending based on optimistic assumptions of lower government interest payments and higher revenues, heightening “concerns over local fiscal uncertainty.”

Outlook: A Cautious Path Ahead

The decision to hold the rate steady introduces an “upward bias for the year-end policy rate,” according to the Bancolombia report, which suggests the rate could remain above 8.50%. The bank’s analysts expect the central bank to maintain a “cautious, data-dependent approach” in the coming months.

Key factors that will continue to shape the central bank’s decisions include persistent upward pressures on inflation from the planned minimum wage increase, elevated inflation expectations, the aforementioned fiscal uncertainty, and tight global financial conditions. While economic activity indicators show continued momentum, driven by a recovery in private sector domestic demand, the central bank appears to be prioritizing stability and a firm anti-inflationary stance in the face of a challenging and uncertain economic environment.

Banco de la República, the central bank of Colombia, in Bogotá. Photo credit: Banco de la República.

At the heart of the debate is the government’s fiscal plan and its ability to stabilize the nation’s finances. The Autonomous Committee for the Fiscal Rule (CARF), an independent body that monitors fiscal policy, has raised red flags, suggesting the government’s projections may be overly optimistic and its proposed measures insufficient to address the underlying fiscal challenges.

A High-Wire Act: The Viability of the Fiscal Plan

The Petro administration’s fiscal plan aims to fund its social programs while maintaining a semblance of fiscal discipline. However, the viability of this plan is a subject of intense debate. The government has activated an “escape clause” in the country’s fiscal rule, a move that allows for temporary deviation from deficit targets in exceptional circumstances. The government justifies this by citing the need to address social and economic challenges, including the lingering effects of the pandemic and global economic uncertainty.

Critics, however, argue that this move, coupled with what they see as unrealistic revenue forecasts, could exacerbate the country’s fiscal woes. The MFMP predicts a deficit that will only gradually decrease over the medium term, a pace that some economists believe is too slow to ensure long-term debt sustainability.

Economic Deterioration and Macroeconomic Instability

The primary risk of the current fiscal situation is a further deterioration of Colombia’s macroeconomic stability. A high and rising debt-to-GDP ratio, which now stands at a concerning level, is a key indicator of this risk. While the exact figure fluctuates, it is in the neighborhood of 60% of GDP. This is significant because a higher debt burden can lead to increased borrowing costs, not just for the government but for the private sector as well, crowding out investment and hindering economic growth.

The fiscal situation is a major contributor to this instability. A persistent deficit signals to investors that the country’s finances are not on a sustainable path, which can lead to capital flight, a weaker currency, and higher inflation.

Proposed Measures and Their Effectiveness

Minhacienda has proposed a series of measures to address the fiscal imbalance, including a combination of spending cuts and revenue-enhancing reforms. A key pillar of the government’s plan is a proposed tax reform, which aims to increase revenue by targeting higher-income individuals and corporations.

The effectiveness of these measures remains to be seen. The success of the tax reform will depend on its final design and its passage through a politically divided congress. Moreover, the proposed spending cuts could face strong opposition, particularly in a pre-election year, and may not be sufficient to close the fiscal gap.

The Human Cost: Impact on Colombia’s Poor

The fiscal challenges have a direct impact on the lives of ordinary Colombians, particularly the most vulnerable. While the government’s social spending programs are designed to alleviate poverty, a deteriorating fiscal situation could ultimately undermine these efforts.

If the government is forced to implement more drastic austerity measures in the future, it could lead to cuts in essential public services, such as healthcare, education, and social assistance programs. Furthermore, the macroeconomic instability associated with a high deficit and debt can lead to higher inflation, which erodes the purchasing power of the poor and exacerbates inequality.

Navigating a Treacherous Path: Debt Stabilization and the Road Ahead

To stabilize its debt, Colombia needs to implement a credible and sustainable fiscal consolidation plan. This would require a combination of realistic revenue projections, prudent spending, and structural reforms to enhance economic growth. The upcoming presidential election further complicates the picture, as politically difficult decisions may be postponed.

Looking ahead, several scenarios are possible:

• Best Case: The government successfully implements its fiscal plan, the tax reform generates the expected revenue, and the economy experiences a period of strong growth, leading to a gradual reduction in the debt-to-GDP ratio.
• Most Probable: The government struggles to fully implement its plan due to political opposition and optimistic revenue assumptions. The debt-to-GDP ratio remains elevated, and the country continues to face macroeconomic headwinds.
• Worst Case: The government’s fiscal plan proves to be unviable, leading to a debt crisis, a sharp economic downturn, and a significant increase in poverty and inequality.

The coming months will be critical for Colombia’s economic future. The government’s ability to navigate the complex fiscal landscape and implement a credible consolidation plan will determine whether the country can achieve sustainable and inclusive growth or faces a period of prolonged economic instability. The performance of key state-owned enterprises, such as the oil giant Ecopetrol (NYSE: EC, BVC: ECOPETROL), will also play a crucial role in the nation’s economic fortunes. The path forward is narrow and fraught with challenges, and the stakes for the Colombian people could not be higher.

Gustavo Petro at his 2025 Labor Day rally. Photo credit: Presidencia de la República de Colombia.

This move, considered exceptional, provides the government with increased borrowing capacity. It allows the Ministry of Finance to bypass restrictions designed to maintain long-term fiscal sustainability. Finance Minister Germán Ávila is expected to provide a public explanation and present the arguments behind the decision.

The fiscal rule, adopted to control public debt and prevent overspending, has served since 2011 as a critical pillar for investor confidence and creditworthiness. Suspending it raises alarms among economists and former officials, who warn that the country may face higher borrowing costs and a possible downgrade from credit rating agencies, such as Moody’s, the only major credit rating agency still maintaining Colombia’s investment-grade status. In May, a top analyst from this agency said to Reuters that if a planned fiscal consolidation in Colombia fails to stabilize public debt and comply with fiscal rules, it could lead to a ratings downgrade for the country.

Analysts had previously warned that the government’s 2025 fiscal deficit target of 5.1% of GDP was unfeasible due to overly optimistic revenue forecasts and reluctance to cut spending. With this suspension, Corficolombiana (the largest financial services company in Colombia) now projects that the fiscal deficit could climb to 7.4% of GDP in 2025, with net public debt hitting a record high of 63% of GDP.

The last time Colombia suspended the fiscal rule was in 2021, during the COVID-19 crisis. That exceptional context justified increased borrowing to respond to the health and economic emergency. Critics argue that no such extraordinary event exists today to warrant this new suspension.

Former finance ministers have raised their concerns. José Manuel Restrepo emphasized via X that the fiscal rule is not a constraint but a safeguard that ensures responsible economic management. Breaking it, in his view, could trigger a chain reaction—rising debt costs, currency volatility, lost investor confidence, and ultimately, deep economic hardship. José Antonio Ocampo echoed these concerns, explaining to the Colombian economic-financial newspaper La República that with this move “access to the IMF’s flexible credit will be lost; the government had no intention of using it, but it shouldn’t be lost. It is given to countries that stand out for the strength of their macroeconomic fundamentals.”

“Suspending the fiscal rule is not only worrying, it also makes clear, once again, that the Petro government is pushing for the 2026 elections based on contracts, debt, and waste,” Mauricio Cárdenas pointed out via X.

The CONFIS meeting that preceded the decision involved key economic and fiscal authorities, including the finance minister, the director of the National Planning Department, and the heads of national treasury, credit, and taxation offices.

As the government prepares to present the new Medium-Term Fiscal Framework on June 13, analysts expect no major spending cuts to be announced. Instead, this suspension signals a departure from Colombia’s historical fiscal discretion, triggering concerns about the long-term credibility of Petro’s economic moves.

Headline photo: Colombia President Gustavo Petro (Gustavo Petro / X)

The funds from this operation are intended to be allocated to non-investment expenses, as per the resolution issued by the MHCP and the company’s 2025 financing plan, and help reach the Gross Debt/EBITDA target for the year.

To obtain the MHCP authorization, the company complied with all required internal procedures and approvals. The MHCP reviewed and authorized the terms of the draft agreement, which will be governed by the laws of the State of New York.

Photo credit: Ecopetrol/Flickr.

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:

1. 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,
2. 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.

“We have tier-1 entities with $2.6 billion in capital, tier-2 entities with 11 billion in capital, and trusteeship of companies worth roughly half a billion. We also have $1.1 billion participation in the insurance sector, and in other financial sector ($6 billion),” said Minister Alberto Carrasquilla Barrera (above).

According to the minister, there are three objectives to the restructuring.

1. Optimize the nations portfolio of securities, safeguarding the strength of the entities and public savings.
2. Avoid duplication, increase efficiency, generate greater value, and increase governance in the management of portfolios.
3. Implement OECD recommendations for best practices in corporate governance by public entities.

Colombia has been invited to join the OECD and as such, must implement several reforms that the multinational organization has deemed essential in order to modernize Colombia’s economy.

Carrasquilla stated that the holding company will be incorporated by November 24.