Petrobras Issues $11 Billion in Record Emerging-Market Bond Sale

Photographer: Dado Galdieri/Bloomberg

Petroleo Brasileiro SA is selling $1.25 billion of three-year fixed-rate notes to yield 175 basis points above U.S. Treasuries. Close

Petroleo Brasileiro SA is selling $1.25 billion of three-year fixed-rate notes to yield... Read More

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Photographer: Dado Galdieri/Bloomberg

Petroleo Brasileiro SA is selling $1.25 billion of three-year fixed-rate notes to yield 175 basis points above U.S. Treasuries.

Petroleo Brasileiro SA sold $11 billion of bonds abroad today, the most ever for an emerging-market issuer, as it seeks to develop the biggest offshore oil find in the Americas in more than 30 years.

Petrobras, as the Brazilian state-run oil producer is known, issued fixed-rate bonds due in three, five, 10 and 30 years as well as three- and five-year floating-rate notes, according to data compiled by Bloomberg. The sale tops the company’s $7 billion offering last year as the largest ever emerging-market corporate dollar-denominated deal.

The world’s biggest producer in waters deeper than 1,000 feet (305 meters) plans to borrow $20 billion this year through bond sales and loans to help finance the oil industry’s biggest investment plan, Chief Financial Officer Almir Barbassa said April 29. The sale is the fifth-largest dollar-denominated corporate bond issue ever and the second-biggest this year after Apple Inc.’s $17 billion offering, the data show.

“I would expect real money to show strong interest,” Henri Alexaline, who helps manage $1 billion of fixed-income investment at FM Capital Partners Ltd. in London, said in an e-mail. “This will test the market appetite to some extent but Petrobras is a well-recognized quasi-sovereign.”

Bank of America Corp., Banco do Brasil SA, Citigroup Inc., HSBC Holdings Plc, Itau Unibanco Holding SA, JPMorgan Chase & Co. and Morgan Stanley arranged the transaction, according to a person familiar with the sale who asked not to be identified because they’re not authorized to speak publicly.

Yields on $5.25 billion of 2021 dollar notes rose five basis points, or 0.05 percentage point, to 3.99 percent at 5:30 p.m. New York time. Preferred shares fell 2.8 percent to 19.39 reais.

Fixed and Floaters

The Rio de Janeiro-based company sold $1.25 billion of three-year fixed-rate notes to yield 175 basis points above U.S. Treasuries. The $2 billion of five-year notes priced to yield 230 basis points over the benchmarks. The company paid 260 basis points more than Treasuries on $3.5 billion of 10-year notes and 265 basis points more on $1.75 billion of 30-year securities, according to data compiled by Bloomberg.

Petrobras priced $1 billion of three-year floating-rate securities at 162 basis points over the three-month Libor rate and $1.5 billion of five-year notes at 214 basis points over Libor.

Petrobras is seeking to finance a five-year, $237 billion spending and investment plan. The company has $74.2 billion in net debt, 10 times the amount for Irving, Texas-based Exxon Mobil Corp. The company has already raised $7 billion this year from bank loans.

The producer is rated BBB by Standard & Poor’s, the second-lowest investment grade rating, in line with Brazil.

To contact the reporter on this story: Boris Korby in New York at bkorby1@bloomberg.net; Veronica Navarro Espinosa in New York at vespinosa@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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