Markets
PBA

Petrobras to Raise $1.28B Though Issuance of Debentures - Analyst Blog

A generic image of multiple stacks of coins next to a pen.
Credit: Shutterstock photo

Per media reports, Petroleo Brasileiro S.A. or PetrobrasPBR has disclosed the details of its proposed debenture issue, which could total up to 4.05 billion reais or $1.28 billion.

According to the report, Petrobras plans to initially sell 3 billion reais worth of debentures. The company also added that it may increase the offering by another 1.05 billion reais if it finds strong demand from investors.

The debentures would be issued in five series that will mature in five, seven and 10 years, respectively. The first and second series of the debentures are expected to yield up to 2.15% above the interbank rate, annually. While the yield of the remaining three debenture series will be based on the official inflation index. The exact yield and the proceeds from the offering are yet to be determined.

Leverage continues to remain a key issue for Petrobras. The company has consistently seen a rise in its debt levels. Moreover, the company's involvement in the multibillion-dollar money laundering and bribery case has set its credit rating at a risk.

The earnings picture has also been soft for Petrobras. Earnings per ADR came in at 28 cents (1 ADR = 2 shares), below the year-ago profit of $0.34, due to the worldwide crude price plunge. The company's cash flow position is also a cause for concern.

In such conditions investors' interest in the debenture issue remains a question.

Brazilian state-run energy giant Petrobras currently carries a Zacks Rank #3 (Hold).

Better-ranked players from the energy sector include LRR Energy, L.P. LRE , Transmontaigne Partners L.P. TLP and Pembina Pipeline Corporation PBA . All these stocks sport a Zacks Rank #1 (Strong Buy).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

TRANSMONTN PTNR (TLP): Free Stock Analysis Report

PETROBRAS-ADR C (PBR): Free Stock Analysis Report

PEMBINA PIPELN (PBA): Free Stock Analysis Report

LRR ENERGY LP (LRE): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

PBA PBR

Other Topics

Stocks