Ecopetrol S.A. has received approval from the Colombian Ministry of Finance and Public Credit to enter into a domestic loan agreement for up to COP700 000 million ($171mn) with Banco Davivienda. The financing will take the form of a non-revolving committed credit line, with a drawdown period of twelve months from the execution date of the loan agreement.
The loan is structured over a five-year term from the date of the first disbursement, with a single bullet repayment at maturity. The interest rate applied will be variable and indexed to the local IBR (Indicador Bancario de Referencia) benchmark rate, in accordance with the terms negotiated with the lending institution.
Funds allocated to non-investment expenses
According to the official resolution issued by the government, the proceeds of this transaction will be used for non-investment expenditures, in line with Ecopetrol’s financing plan. The company has complied with all internal procedures and obtained the necessary approvals to finalise the loan agreement.
The contract also includes standard borrower default provisions, such as failure to pay principal or interest, deterioration of repayment capacity, impairment of financial reporting, or breach of contractual obligations. In such cases, the lenders will be entitled to demand early repayment of the loan, in accordance with the agreed contractual procedures.
Financial terms considered competitive
The negotiated loan agreement includes the lowest spread rate Ecopetrol has obtained in the local market to date. The company views these conditions as a continued show of support from the Colombian financial sector, despite what it describes as challenging market conditions.
The committed credit line represents a reliable and flexible source of liquidity for Ecopetrol. It strengthens the company’s cash position and provides additional leeway to meet operational needs. The committed nature of the facility is also regarded as a positive factor in assessments by credit rating agencies of the company’s financial robustness.
