A Review of the Nigerian Energy Industry

Petrobras sells $2.5bn in 100-year bonds

02 June 2015, News Wires – Brazilian state-run oil company Petrobras said has sold $2.5 billion in 100-year bonds, as its cost of borrowing surged in the wake of a giant corruption scandal and concern about its soaring debt, one of the world’s largest, rose.

petrobrasPetrobras sold the 6.85% bonds due in June 2115 at 81.07% of face value to yield 8.45%, Reuters reported.

Because of the discount, Petrobras raised about $2.03 billion in the sale.

While the sale shows that investors are still willing to loan money to the company after a price-fixing, bribery and political kick-back scandal led to about $17 billion in write-downs, investors are demanding higher returns from the Rio de Janeiro-based company despite low international interest rates.

Petrobras sold $1.8 billion of 5.625% 30-year bonds in May 2013 to yield 7.3%; it was borrowing similar amounts in dollars for less than 4% as recently as 2012.

Deutsche Bank and JP Morgan managed the sale.

Petrobras has turned increasingly to China’s banks for financing and signed $7 billion-worth in loans during the visit to Brasilia by Chinese Premier Li Keqiang last month.

Earlier on Monday, the company said it finalised a five-year export financing loan of 3 billion reais ($945.3 million) for its unit Petrobras Distribuidora SA from Brazil’s second largest private sector bank Banco Bradesco SA.

Petrobras is the world’s third most indebted non financial company.

– Reuters

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