Petrobras raises $11bn in bond sale

Maria_das_Graças_Foster_brazil_oil_petrobras14 May 2013, News Wires – Brazil’s state oil company Petrobras has sold $11 billion of global debt in the largest-ever bond offering by a Latin American company.

The deal was split in six tranches comprised of fixed- and floating-rate debt with maturities ranging from three to 30 years, sources told Reuters and IFR, a Thomson Reuters unit that covers the capital markets.

Investors placed bids topping $50 billion for the debt, a sign of strong appetite for high-rated emerging market companies, IFR said.

Petrobras raised more than half of the $20 billion it intended to borrow this year to ensure investment in oil exploration and production despite sagging revenue.

The oil giant is planning to spend $237 billion through 2017 in what is considered the world’s largest corporate investment plan by a single company.

The Rio de Janeiro-based company last sold debt on 1 February last year, when it raised $7 billion from offering bonds of four different maturities.

To date, the largest sale in the region had been Venezuelan state-owned PDVSA’s $7.5 billion bond transaction in April 2007, according to Thomson Reuters data.

The cash comes as Petrobras is expected to participate in an auction of oil and natural gas rights in Brazil this week, the first conducted by the government in five years.

Sources familiar with the transaction told Reuters that $1.25 billion in three-year paper was sold at a yield of 2.14%, or 1.75 percentage points over comparable US Treasuries.

About $1 billion of three-year, floating-rate notes maturing in May 2016 were sold at a yield equivalent to 1.62 points over the benchmark three-month Libor.

The company sold $2 billion of five-year, fixed-rate paper at a yield of 3.13%, or 230 basis points over comparable Treasuries. Also, $1.5 billion of five-year, floating-rate notes were sold at 214 basis points over Libor, the sources added.

Other parts included the sale of $3.5 billion in 10-year notes at a yield of 4.52%, or 260 basis points over comparable Treasuries, and $1.75 billion of 30-year bonds at a yield of 5.76%, or 265 basis points over Treasuries, the sources noted.

Petrobras is expected to increase the amount by 5% to Asian investors in an over-allotment sale later on Monday, the sources added.

The company hired the investment banking units of Bank of America, Banco do Brasil, Citigroup, HSBC Holdings, Itaú Unibanco Holding, JPMorgan Chase & Co and Morgan Stanley & Co to handle the deal.

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