By William Jones, Contributing Reporter
RIO DE JANEIRO, BRAZIL – According to market sources Brazilian oil giants Petrobras attracted US$22 billion worth of interest and sold US$8.5 billion in a new bond offer. The new multi-billion dollar six-part bond offering is the second of its kind which previously drew US$11 billion in May last year.
The bonds will mature in periods ranging from three to thirty years and are being sold by a subsidiary called Petrobras Global Finance. The funds raised by Petrobras should be used to help fund the business plan of the company from 2014 to 2018. The coordinators of the operation are HSBC, JPMorgan, Citi Bank, Bank of China, BB Investments and Bradesco.
Petrobras is one of the most indebted oil companies in the world, as reveled in a report by Bank of America, and has a current standing debt thought to be in the region of US$115. The issue of bonds is yet another drive to raise US$221 billion the company needs in investment over the next five years to continue deep sea oil exploration and production.
The company, still seeking offshore oil finds in Latin America, also floated about US$5 billion of bonds in Euros and Pound Sterling in January this year as the company’s investment reach spans further across the world to finance their plans. Those bonds will mature between 2018 and 2034 while the ones issued last year covered the period between 2013 and 2017.
“Everyone knows they [Petrobras] need the money, and it makes sense for them to raise it now,” Carlos Gribel, an emerging markets specialist told business news agency Bloomberg. However, Petrobras, whose shares fell last year, declined to comment.
The company has increased the size of its bond issuance in dollars year after year since 2009 which has raised the cost of financing. Petrobras’ sale of bonds in May last year (US$11 billion) was the highest ever amount sold by a Latin American country with demand at that time exceeded US$50 billion.
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