Petrobras taps dollar bonds to fund tender
NEW YORK, Oct 16 (IFR) - State-controlled oil and gas company Petrobras stepped back into the US dollar bond market last Tuesday for the second time this year with yet another liability management transaction.
The company added US$1bn to its 5.6% 2031 notes to fund a tender for several of its bonds with maturities between 2023 and 2030, continuing its strategy of paying down near-term debt and improving its capital structure.
Along with the tender and additional bond sale, Petrobras also plans to use another US$1bn of cash on hand to retire debt, said a New York banker close to the deal.
"The deal went well as Petrobras continues its deleveraging process," he said. "Petrobras is one of the strongest names in Brazil, and it is one of those companies that can come in and out of the market."
Interest in the offering was robust, with more than 200 accounts participating. Books peaked at US$3.7bn, before shrinking to US$3.5bn after price tightening
The tap was priced at 109.579 to yield 4.40%, the tight end of guidance of 4.45% area (plus or minus 5bp) and inside initial price thoughts of 4.60% area.
Final pricing come about 10bp wide to levels in the secondary market, where the bond was trading at a price of 110.43 to yield 4.301%, according to MarketAxess data.
Between 2015 and 2019, Petrobras had made strides in reducing its total debt and improving its credit metrics.
The oil company reduced its total financial debt to US$63bn from US$126bn by using internal cashflow between 2015 and 2019, said Fitch in a report.
The 2031 notes have Ba2/BB– ratings from Moody's and Fitch.
Last week's deal was the second time the company had been in the dollar market in 2020. In May, it raised US$3.25bn in a two-part dollar deal.
Bank of America, Deutsche Bank, HSBC, Itau, JP Morgan, Santander, and Scotiabank led last week's SEC-registered transaction.
(This story will appear in the October 17 issue of IFR Magazine)
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