Petrobras to Fund Investments Through Bonds, Banks

Petroleo Brasileiro SA, Brazil’s state-controlled oil company, plans to fund investments in coming years through bond sales and bank loans after holding the world’s biggest stock offering in September.

About a third of the financing Petrobras will seek for its five-year investment plan will come from bond sales, a third from commercial bank loans and the remainder from development banks, Chief Executive Officer Jose Sergio Gabrielli told reporters in Sao Paulo today.

Petrobras aims to invest $224 billion through 2014 to develop reserves along Brazil’s coast and sold $70 billion of shares on Sept. 24 to help fund the plan. Petrobras bond sales will likely benefit from rising demand for emerging-market corporate debt, ING Investment Management’s Eric Conrads said.

“I don’t think it will be very difficult for them to place it in a world that is hungry for yield,” Conrads, who helps manage about $1 billion in emerging market funds at ING in New York, said in a telephone interview.

Petrobras needs to sell $32 billion of new debt through 2014 and roll over another $38 billion as it seeks to double production over the next decade, Gabrielli said on Nov. 9.

To contact the reporters on this story: Jose Sergio Osse in Sao Paulo at josse1@bloomberg.net; Peter Millard in Rio de Janeiro at pmillard1@bloomberg.net

To contact the editor responsible for this story: Dale Crofts at dcrofts@bloomberg.net

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