January 17, 2017 / 10:25 PM / 2 years ago

UPDATE 1-Petrobras closes $4 billion bond issuance

(Adds pricing and background on company)

BRASILIA, Jan 17 (Reuters) - Brazil’s state-controlled oil company Petrobras on Tuesday closed a $4 billion issuance of 5 and 10-year notes in international markets as part of the debt-laden company’s efforts to term out upcoming maturities, it said in a statement.

The order book was five and four times oversubscribed in the 5 year and 10-year tranche, respectively, with 592 investors from the United States, Europe, Asia and Latin America participating, it said.

The notes were issued by Petrobras’ wholly owned subsidiary Petrobras Global Finance, which intends to use the net proceeds to repurchase notes sold in previously announced tender offers, with the remainder going to refinance upcoming maturities.

The bonds were priced on Jan. 9 at 6.5 percent on the five-year and 7.375 percent on the 10.

Petrobras has been struggling to regain its footing following a corruption scandal that has had a broad impact on Brazil’s political and business classes.

New management has been shedding assets in an effort to deleverage and improve the company’s credit standing.

While Petrobras fell short of its 2015-2016 divestment target to raise $15.1 billion, investors largely feel the company is heading in the right direction.

Timing of the issuance was seen as opportune given how much Brazilian bonds have rallied since the broader EM sell-off following Donald Trump’s surprise victory in the U.S. presidential elections in November.

After spiking to around 8.3 percent following the U.S. election, the yield on Petrobras’ 8.75 percent 2026s has steadily dropped to hit the low 7 percent mark at the start of the year. (Reporting by Anthony Boadle; Editing by Diane Craft and Sandra Maler)

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