Petroleo Brasileiro SA could return to the dollar-bond markets as soon as this year after a corruption scandal all but closed off credit markets to Brazil’s national oil company, Chief Financial Officer Ivan Monteiro said.
While a foreign debt or domestic issuance is a possibility after the Rio de Janeiro-based driller reported its first audited financial results since August, there is no chance for a share sale, and any such operation would need approval from Congress, Monteiro said in an interview Thursday.
“For a capital increase, this process needs to start a year and a half in advance,” Monteiro said. “Since there are no procedures in the works in the company, and there won’t be any anytime soon, it can’t happen in the next three or four years under any hypothesis.”
Petrobras, as the state-run producer is known, posted earnings Wednesday to end a five-month debate on how to book losses from a graft scandal allegedly involving inflated contract prices and kickbacks to executives and politicians. The release averts a potential acceleration of debt payments. The company last sold dollar bonds in March 2014, according to data compiled by Bloomberg.
“If anyone turns up with an opportunity that reflects a smaller issuing cost than what I have in the secondary market, it will be very welcome,” Monteiro said, adding that borrowing costs fell after the earnings release. “It doesn’t mean we’ll do it.”
Petrobras’s $2.5 billion of bonds due 2024 advanced 1.9 cents to 100 cents on the dollar at 4:33 p.m. in New York, approaching a four-month high.
Petrobras bond sales are normally several billion dollars, and it doesn’t makes sense for the company to start doing small issuance, even in the domestic market, Monteiro said. The company is “strongly” considering issuing infrastructure bonds in Brazil.
“You won’t stop to analyze $100 million; you’ll stop the company to look at something bigger,” Monteiro said. “In general, Petrobras does large issuances.”
The company has already secured enough funding for 2015, mainly from bank loans, and is looking at bond markets to finance spending for next year, he said.