Petrobras bonds end higher on China loan
By Paul Kilby
NEW YORK, Feb 29 (IFR) - Bonds issued by Brazil's Petrobras ended the day one to two points higher on Monday as the beleaguered oil company eased refinancing pressure by clinching a US$10bn loan from China.
The up to US$10bn loan from China Development Bank, which can be repaid in cash or oil, will do much to reduce refinancing risks for what is one of the world's most indebted companies.
The company has about US$24bn in debt maturing between this year and next against some US$25bn in cash, according to Moody's.
However, it was bonds due between 2018 and 2020 that outperformed in a up day for the state-owned entity Monday, as investors bet that the new loan will help the company tackle maturities during that period.
"That was the most vulnerable part of the curve," said a New York based trader. "This gives them some breathing room so they are not forced to do asset sales. One big asset sale and they will be out of the woods between 2017 and 2018s."
The 2018s, 2024s and 2044s were ending the day anywhere between one and two points higher at 94.00-94.75, 72.75-73.50 and 65.00-66.00, respectively.
In an effort to address high leverage ratios, the company has been slashing capital spending and trying to shed assets, albeit at a slow pace.
"If they could knock some of their refinancing risks and get yields down, perhaps they could come to market next year," the trader said. Continuación...