Petrobras raises $6.75 billion in return to global bond markets

Tue May 17, 2016 7:42pm EDT
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By Guillermo Parra-Bernal

SAO PAULO (Reuters) - State-controlled Petróleo Brasileiro SA raised $6.75 billion on Tuesday from a sale of five- and 10-year dollar-denominated bonds, in a closely watched return to global debt markets after the suspension of Brazilian President Dilma Rousseff.

The sale is the first by any Brazilian company since June and the first to test investor sentiment toward Brazil since Rousseff was ousted last week to face an impeachment trial. Petrobras (PETR4.SA: Quote), as the firm is known, will also buy back up to $3 billion of debt maturing in 2018.

Investors have said Petrobras, which for years was Rousseff's main tool to enact policies that helped drive Brazil into a recession not seen in eight decades, could gain most from the change in Brazil's leadership. Rousseff forced Petrobras to borrow beyond capacity to bolster her Workers Party's political agenda. The company is the world's most indebted oil firm.

In a strong sign of backing for a company that has been the largest emerging market corporate borrower in recent decades, investors placed more than $20 billion worth of bids for the new securities, according to three sources directly involved with the transaction. They asked to remain anonymous because terms of the deal are private.

The deal could help pave the way for other Brazilian companies to raise money in a "very gradual" reopening of debt markets, as optimism mounts that Rousseff's exit may usher in the implementation of more business-friendly policies, said Eduardo Vieira, an analyst with Deutsche Bank Securities in New York.

"Petrobras needed to tap the market, since one of the company's pressing issues was liquidity," he said.

The sale is Petrobras' first attempt to place global bonds since a $2.5 billion offer of bonds maturing in 2115 last June. The company borrowed from Chinese lenders in recent months to counter the impact of plunging oil prices, restricted access to capital markets and fallout from the sweeping corruption scandal that accelerated Rousseff's fall.

The company sold $5 billion in five-year notes at 8.625 percent and $1.75 billion in 10-year notes at 9 percent. Petrobras had last sold similar debt in March 2014, bearing interest of 4.875 percent and 6.256 percent, respectively.   Continued...

Gasoline prices are displayed at a Brazilian Oil Company Petrobras gas station in Rio de Janeiro, Brazil, February 6, 2016. REUTERS/Ricardo Moraes