OSX Said to Plan as Much as $500 Million of Secured Bonds

OSX Brasil SA (OSXB3), the oil-platform builder controlled by billionaire Eike Batista, plans to sell as much as $500 million in three-year secured bonds next month, two people familiar with the deal said.

OSX expects to pay a coupon of 8.5 percent to 9.5 percent, the people said, declining to be named because the deal isn’t public yet. Proceeds will be used to finance the construction of Rio de Janeiro-based OSX’s third floating oil-production platform, they said.

The bond sale follows the start of oil output at Batista’s OGX Petroleo e Gas Participacoes SA (OGXP3) in January. OSX delivered its first unit to OGX last year and plans to supply at least a further $4.1 billion worth of equipment before the end of 2013, according to data on its website.

OSX will probably find enough buyers for the issuance since there aren’t many bonds with this short-term maturity profile and investors are looking for Brazilian high-yield securities, Leonardo Kestelman, managing director at Dinosaur Securities Inc. in Sao Paulo, said in an interview today.

“OSX has a captive market as many investors outside Brazil believe in Batista’s projects,” said Kestelman, who manages $800 million of emerging-market debt.

OSX hired Oslo-based Pareto Securities ASA as global coordinator for the sale. DNB ASA, Norway’s biggest bank, will help manage the deal, the people said. The road show for the bond sale will start on Feb. 29 and the book-building process will last 10 to 15 days, one of the people said.

An official at OSX, who asked not to be named citing company policy, declined to comment.

OSX fell 3.2 percent to 15.51 reais at the close in Sao Paulo today. The stock has declined 22 percent in the past 12 months.

To contact the reporter on this story: Juan Pablo Spinetto in Rio de Janeiro at jspinetto@bloomberg.net

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

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