EM LATAM CREDIT: Ecopetrol: Management Changes? - Negative
(ECOPET; Ba1/BB+neg/BB+neg)
"These are the secret moves in Ecopetrol to change statutes and allow the arrival of Minister Edwin Palma to the presidency" - Semana
Colombia majority owned and government controlled energy company Ecopetrol is being investigated by the prosecutors office and its CEO, Ricardo Roa, allegedly made decisions where he had a conflict of interest which suggested corruption. We posted earlier this month:
https://mni.marketnews.com/43PPAKH
These allegations have persisted since last year and it seems that maybe Roa's days as CEO might be over, based on local news outlet Semana who is reporting that the current Minister of Energy and Mines might take over soon.
It has been difficult for Ecopetrol to operate this year amid declining oil prices and a restriction on new exploration that has hindered reserve replacement.
The company has been expanding its generation of electricity from alternative energy sources by buying wind farms and partnering with utilities such as AES Andes.
The Colombia sovereign is under immense pressure to increase revenues to narrow the fiscal deficit so maybe a management change is a way to attempt to increase those tax revenues from Ecopetrol.
ECOPET 2036s were last quoted T+454bp, 2bp wider QTD and 25bp wider YTD.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
FOREX: USD Dip Stabilises, RBA Policy Statement Key
- Headed through the European close, the greenback is holding the bulk of the day's losses having backtracked around 0.5% on the back of the Moody's downgrade late on Friday. Through APAC hours, JPY and CHF were the original outperformers, but a notable step higher in EGB/Gilt yields, a general steepening of the curve hindered progress and outperformance switched to EUR and GBP into the NY crossover.
- The RBA rate decision is a focus Tuesday. The Bank are expected to cut rates a further 25bps to 3.85%, but AUD/USD's range trade since the beginning of the month signals a market with little concern over easier policy. The policy statement will be watched carefully as markets priced a further 2 x 25bps cuts beyond assumed easing tomorrow, despite tariff uncertainty and the prospect of further stimulus from China.
- Canadian CPI for April is due Tuesday, ahead of which USD/CAD remains in a consolidation pattern after correcting higher to trade either side of 1.40. 1.4022 marks notable resistance ahead, the 200-dma, above which markets trade the best levels since mid-April. The 50-dma will imminently form a death cross, indicating strong short-term downward momentum.
- GBP/USD traded as high as 1.3404 through the initial phase of USD sales this morning, but has backtracked to clock only a ~75 pip gain on the day. CPI stats on Wednesday should prove pivotal here as the BoE's MPC remain divided on near-term rates strategy without hard data on wages through April.
CRYPTO: Senate Expected To Hold Second Vote On Stablecoin Bill Appox 17:30 ET
The United States Senate is expected to hold a procedural vote at around 17:30 ET 22:30 BST on the 'GENIUS Act', a landmark bipartisan crypto bill to regulate stablecoins. The bill has been revised after Democrats blocked a first attempt at passing the bill earlier this month, citing concerns over big tech firms issuing their own stablecoins and the Trump family's business dealings with the crypto industry.
- Barron's notes: "Among other provisions, the bill would require stablecoins, whose value is typically pegged to the dollar, to hold reserves of liquid, safe assets like Treasury bills. Issuers would also have to follow anti-money-laundering and terrorism finance rules and to give holders of coins priority to recoup their money in a bankruptcy."
- Democrat negotiators noted in a memo late last week that the revised legislation strengthens "provisions on anti-money laundering, foreign issuers, national security safeguards, consumer protection," and includes, "measures to preserve the safety and soundness of our financial system.”
- The memo added that Democrats have received "assurances" from Republicans on other outstanding issues, includuing limitations on big tech firms issuing stablecoins, expanded prohibitions on interest-bearing stablecoins and “a broad savings clause guaranteeing the application of existing federal consumer protection laws, including but not limited to protections stemming from the Consumer Financial Protection Bureau and the Federal Trade Commission,” per Politico.
OPTIONS: Larger FX Option Pipeline
- EUR/USD: May21 $1.1140-50(E1.3bln), $1.1250(E1.1bln), $1.1390-05(E2.1bln); May22 $1.1175(E1.9bln); May23 $1.1145-50(E1.1bln), $1.1180-85(E1.1bln), $1.1300(E1.0bln), $1.1330-50(E1.3bln), $1.1400(E1.1bln)
- USD/JPY: May23 Y144.00($1.4bln), Y145.00($1.9bln)
- GBP/USD: May22 $1.3260-70(Gbp1.5bln)
- USD/CAD: May22 C$1.4050($1.3bln); May23 C$1.4000-15($1.2bln)
