PRESS RELEASE: S&P Revises Outlooks On Ecopetrol, Centragas, Transgas To Pos

9th Jul 2010 20:36

The following is a press release from Standard & Poor's: -- On July 7, 2010, we revised our foreign currency sovereign outlook on Colombia to positive from stable. -- As a result, we are also revising our outlooks on Ecopetrol, Centragas, and Transgas to positive from stable, while affirming our 'BB+' ratings on the company and the projects. -- The positive outlook reflects that on Colombia. MEXICO CITY (Standard & Poor's) July 9, 2010--Standard & Poor's Ratings Services said today that it revised its outlook on Colombian majority state-owned oil and gas company Ecopetrol S.A. and pipeline projects Centragas - Transportadora de Gas de la Region Central de AP Gasoductos Administracion & Cia. S.C.A. and TransGas de Occidente S.A. to positive from stable. At the same time, we affirmed our 'BB+' corporate credit rating on Ecopetrol and the 'BB+' issue-level ratings on Centragas' and Transgas' respective $172 million and $240 million notes due 2010. The outlook revision followed Standard & Poor's July 7 revision of the foreign currency outlook on the Republic of Colombia (foreign currency: BB+/Positive/B; local currency: BBB+/Stable/A-2)to positive from stable, while affirming the 'BB+' foreign currency and 'BBB+' ratings on the sovereign. The positive foreign currency outlook on Colombia reflects the likelihood of an upgrade if the next administration, led by president-elect Juan Manuel Santos, pursues policies that strengthen the growing resilience of the economy, including reducing its vulnerability to external shocks. Although Colombia's net external liability position has widened in recent years, this has stemmed largely from foreign direct investment, with the portion of external debt shrinking modestly. "The outlook revision on Ecopetrol results from the high likelihood that the government of Colombia would provide timely and sufficient extraordinary support to the company in the event of financial distress, and from its stand-alone credit profile," said Standard & Poor's credit analyst Fabiola Ortiz. We assess the stand-alone credit profile on Ecopetrol in the 'BB' category. According to our government-related entities criteria, if we raised our sovereign rating on Colombia to 'BBB-', we would similarly raise our corporate credit rating on Ecopetrol, based on our view of a "high" likelihood of extraordinary government support. The rating on Ecopetrol also reflects its leading position in Colombia's oil and gas industry, low production costs, and proven access to capital markets. However, the rating is limited by the firm's exposure to commodity price volatility and its aggressive expansion plans. Ecopetrol is a vertically integrated oil company and plays a key role in the local energy supply market. The 'BB+' foreign currency ratings on Centragas' and Transgas' notes reflect the position of majority state-owned oil and gas company Ecopetrol as the single source of repayment and the projects' adequate liquidity position relative to debt. The positive outlooks reflect our foreign currency sovereign outlook on Colombia. The positive outlook on Centragas and Transgas mirrors that on Ecopetrol. RELATED CRITERIA AND RESEARCH -- General Criteria: Enhanced Methodology And Assumptions For Rating Government-Related Entities, June 29, 2009 -- Key Credit Factors: Business And Financial Risks In The Oil And Gas Exploration And Production Industry, Nov. 10, 2008 -- 2008 Corporate Criteria: Analytical Methodology, April 15, 2008 Complete ratings information is available to RatingsDirect on the Global Credit Portal subscribers at www.globalcreditportal.com and RatingsDirect subscribers at www.ratingsdirect.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com. Use the Ratings search box located in the left column. Primary Credit Analyst: Fabiola Ortiz, Mexico City (52) 55-5081-4449; [email protected] Secondary Credit Analysts: Veronica Yanez, Mexico City (52) 55-5081-4485; [email protected] Jose Coballasi, Mexico City (52)55-5081-4414; [email protected] No content (including ratings, credit-related analyses and data, model, software or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of S&P. The Content shall not be used for any unlawful or unauthorized purposes. S&P, its affiliates, and any third-party providers, as well as their directors, officers, shareholders, employees or agents (collectively S&P Parties) do not guarantee the accuracy, completeness, timeliness or availability of the Content. 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