Moody's Maintains Ecopetrol's Global Credit Rating at Ba1 with a Stable Outlook

Rhea-AI Summary

Moody's has maintained Ecopetrol's (NYSE: EC) global credit rating at Ba1 with a stable outlook following its periodic review on February 24, 2025. The company's individual rating remains at b1.

The rating reflects Ecopetrol's position as Colombia's primary oil and gas producer, controlling approximately 60% of national production. Moody's highlighted the company's significant energy transmission business across Latin America and stable cash flow from subsidiaries Interconexión Eléctrica S.A. E.S.P. and Cenit SAS.

Key factors supporting the rating include increased production levels and reduced balance of the Fuel Price Stabilization Fund (FEPC), enhancing company liquidity. Moody's expects Ecopetrol's financial obligations to maintain support through access to global and Colombian capital markets, along with government backing.

Positive

• Maintained Ba1 credit rating with stable outlook
• Controls 60% of Colombia's oil and gas production
• Increased production levels
• Reduced Fuel Price Stabilization Fund balance improving liquidity
• Strong government support and market access

Negative

• Credit rating remains at sub-investment grade (Ba1)

Insights

Financial Analyst

Moody's maintenance of Ecopetrol's Ba1 rating with stable outlook merits careful interpretation for investors. This rating sits one notch below investment grade, reflecting a credit profile with moderate risk but still considered "speculative" by institutional standards.

The two-notch uplift from Ecopetrol's standalone b1 rating to Ba1 underscores the critical "government support" factor in Moody's assessment. As Colombia's national oil company with the government holding 88.49% ownership, Ecopetrol benefits from implied sovereign backing, though this creates exposure to Colombia's own Baa2 sovereign rating.

The reduction in the Fuel Price Stabilization Fund (FEPC) balance is particularly significant. This mechanism has historically created substantial receivables when domestic fuel prices were kept below international benchmarks, effectively functioning as an interest-free loan from Ecopetrol to the government. The declining balance suggests improved cash conversion efficiency.

Ecopetrol's diversification strategy through the ISA acquisition appears to be paying dividends in Moody's assessment. The stable regulated cash flows from energy transmission assets provide a counterbalance to volatile oil revenues, creating a more resilient financial profile during commodity price fluctuations.

For investors, this rating maintenance signals stable access to debt markets, though at higher costs than investment-grade peers like Petrobras (recently upgraded to investment grade). The company's ability to maintain this rating despite industry pressures demonstrates financial discipline, but the subinvestment grade status continues to limit its investor base and increases borrowing costs.

BOGOTA, Colombia, Feb. 27, 2025 /PRNewswire/ -- Ecopetrol S.A. (BVC: ECOPETROL; NYSE: EC) (the "Company" or "Ecopetrol") informs that, on February 24, 2025, Moody's reported the results of its periodic review of the Company's rating, maintaining its global credit rating at Ba1 with a stable outlook. Similarly, the individual rating remains at b1.

Moody's noted that the global rating of 'Ba1' reflects the Company's status as the main producer of oil and gas in Colombia, with approximately 60% of the country's production, as well as its significant energy transmission business in Colombia and other Latin American countries, and a solid and stable cash flow in its subsidiaries Interconexión Eléctrica S.A. E.S.P. and Cenit SAS.

The rating agency highlighted the increase in production and the reduction of the balance of the Fuel Price Stabilization Fund (FEPC), which supports the Company's liquidity, and mentioned that Moody's expects that Ecopetrol's financial obligations will continue to be supported by access to global and Colombian capital markets, and government support.

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Ecopetrol is the largest company in Colombia and one of the main integrated energy companies in the American continent, with more than 19,000 employees. In Colombia, it is responsible for more than 60% of the hydrocarbon production of most transportation, logistics, and hydrocarbon refining systems, and it holds leading positions in the petrochemicals and gas distribution segments. With the acquisition of 51.4% of ISA's shares, the company participates in energy transmission, the management of real-time systems (XM), and the Barranquilla - Cartagena coastal highway concession. At the international level, Ecopetrol has a stake in strategic basins in the American continent, with Drilling and Exploration operations in the United States (Permian basin and the Gulf of Mexico), Brazil, and Mexico, and, through ISA and its subsidiaries, Ecopetrol holds leading positions in the power transmission business in Brazil, Chile, Peru, and Bolivia, road concessions in Chile, and the telecommunications sector.

This release contains statements that may be considered forward-looking statements within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, and Section 21E of the U.S. Securities Exchange Act of 1934, as amended. All forward-looking statements, whether made in this release or in future filings or press releases, or orally, address matters that involve risks and uncertainties, including in respect of the Company's prospects for growth and its ongoing access to capital to fund the Company's business plan, among others. Consequently, changes in the following factors, among others, could cause actual results to differ materially from those included in the forward-looking statements: market prices of oil & gas, our exploration, and production activities, market conditions, applicable regulations, the exchange rate, the Company's competitiveness and the performance of Colombia's economy and industry, to mention a few. We do not intend and do not assume any obligation to update these forward-looking statements. 

A rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time.

For more information, please contact:

Head of Capital Markets
Carolina Tovar Aragón
Email: investors@ecopetrol.com.co 

Head of Corporate Communications (Colombia)
Marcela Ulloa
Email: marcela.ulloa@ecopetrol.com.co 

 

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SOURCE Ecopetrol S.A.

FAQ

What is Ecopetrol's (EC) current Moody's credit rating as of February 2025?

Moody's maintained Ecopetrol's global credit rating at Ba1 with a stable outlook, while the individual rating remains at b1.

What percentage of Colombia's oil and gas production does Ecopetrol (EC) control?

Ecopetrol controls approximately 60% of Colombia's oil and gas production.

What factors contributed to Ecopetrol's (EC) Ba1 rating maintenance in 2025?

Increased production, reduced FEPC balance, strong market position, significant energy transmission business, and stable cash flow from subsidiaries contributed to the rating.

How does Moody's expect Ecopetrol (EC) to maintain its financial obligations?

Through continued access to global and Colombian capital markets and government support.