S&P affirms Oleoducto de Crudos Pesados

Standard & Poor's said it affirmed Ecuador-based Oleoducto de Crudos Pesados' BBB $900 million senior bank loan and removed the rating from CreditWatch with developing implications, where it had been placed on Dec. 28.

The rating action reflects S&P's opinion that the project's credit quality will not be affected after Andes Petroleum Co. completes its acquisition of Encana Corp.'s (A-/negative) shares in Oleoducto de Crudos Pesados. Andes is a joint venture of two Chinese petroleum companies: China Petroleum & Chemical Corp. (BBB/stable) and China National Petroleum Corp.

Although Andes is not currently rated, S&P said the rating affirmation reflects the protection to the project's credit quality from a standby letter of credit that will be incorporated into the structure, in favor of the security trustee. The letter of credit will be provided by The Bank of Nova Scotia (AA-/stable/A-1+) and it would fully cover Andes' new debt service obligations.

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