Petrobras' Century bond steals show despite soft markets

lunes 1 de junio de 2015 17:20 GYT

By Paul Kilby

NEW YORK, June 1 (IFR) - Petrobras stole the show on Monday with a US$2.5bn Century bond that proved it once again had market access and paved the path for potentially more debt issuance by the embattled oil company later in the year.

The deal stunned market participants as the company, still reeling from a widespread corruption investigation, was not thought to be ready to come back to the global bond markets.

"It took the whole market by surprise," said a New York based trader, who was bidding the new bond at plus 1.5 points in the grey market by late afternoon.

"No one thought they would do it. They can now come with a multi-tranche deal without leaving much money on the table."

Launched at a final yield 8.45%, the Century bond came 40bp inside initial price thoughts of 8.85% area and at the tight end guidance of 8.55% area (plus/minus 10bp) on the back of a multi-billion book.

Those levels, not to mention an expected discounted dollar price of around 80, looked attractive, offering a 110bp pick up to the 30-year section of its curve.

Thought to have been supported by anchor orders, the deal was heard to have lured pension funds and insurance companies which need to match long-term liabilities with similarly dated assets.

The solid response to Petrobras's latest bond came even as much of the Brazilian bond complex suffered some weakening after US Treasury yields climbed to one-week highs Monday following the release of solid US manufacturing and construction data.   Continuación...