UPDATE 1-Petrobras to sell local debt in wake of Vale deal, source says

miércoles 19 de febrero de 2014 09:01 GYT

By Guillermo Parra-Bernal

SAO PAULO Feb 19 (Reuters) - Petróleo Brasileiro SA is considering the sale of about 3 billion reais ($1.26 billion) in local notes to fund infrastructure projects, helping the state-controlled oil company tap investors beyond its traditional base, a source with direct knowledge of the situation said.

The Rio de Janeiro-based company, which has not sold senior debt in the domestic market in 12 years, is discussing with banks how to place an offering of so-called infrastructure debentures soon, the source, who requested anonymity because the plan is in the works, said earlier this week. The inflation-linked notes would be split into different maturities, the source added.

Petrobras, as the company is known, wants to follow in the footsteps of Vale SA, which last month raised 1 billion reais in a similar transaction. Robust demand for the notes allowed Vale, the world's largest iron ore producer, to borrow at costs below those available to Brazil's federal government.

The domestic debt offering could also help Petrobras buy time ahead of a planned comeback to international debt markets. According to the source, the company wants to clinch the sale of dollar-denominated bonds during the first half and extend a successful offering of securities denominated in the euro and British pound in the second half.

A Petrobras deal could increase the infrastructure debenture market's visibility, as companies and the government seek funds for much-needed road, port and airport projects. Sales of the notes could reach 9.5 billion reais this year, more than twice the 4.5 billion reais sold in 2013, Luciano Coutinho, president of state development bank BNDES, said last year.

If successful, Petrobras' sale would be the biggest single offering of Brazilian infrastructure debentures since the market took off a couple of years ago. A Petrobras spokesman did not have an immediate comment.