18 de noviembre de 2014 / 20:18 / en 3 años

Petrobras earnings delay clouds bond issuance in early 2015

NEW YORK, Nov 18 (IFR) - Brazilian state-run oil company Petrobras is likely to put off new debt sales until closer to mid-2015, as it grapples with a money-laundering and corruption investigation that has temporarily shut it out of the capital markets, say analysts and bankers.

Petrobras, the largest bond issuer across emerging markets, has typically concentrated new debt sales in the first quarter of the year, with its most recent multi-tranche jumbo deals pricing in January and March.

However, a widening investigation into whether the company overpaid for assets and works provided by contractors and funneled excess funds to political parties has forced it to put off the release of quarterly earnings, clouding the outlook for a new bond issue in the first few months of 2015.

“Although Petrobras has time to publish its 3Q14 audited figures, we believe it is important that it does so before the end of 1Q15, or it will risk not being able to come to the market as it typically does in the early months of each year to fund its aggressive investment program,” Donald McLauchlan, an analyst at UBS Wealth Management, said in a note to clients.

Many, however, believe the company is in no hurry to issue bonds and could easily afford to wait.

“Petrobras has done its issuance for this year, and there is nothing that says they have to issue in February as opposed to June,” said a syndicate banker in New York.

Top Petrobras executives said in a conference call on Monday that the company will not be able to issue debt until the release of audited quarterly results, which may be delayed until the end of January.

But even assuming that auditors will sign off by then, Petrobras would be left with a window of just two weeks before those numbers go stale on February 12, said the banker.

At that point, it will likely have to wait until the release of 2014 full-year results before returning to the international debt markets. Petrobras is yet to set a date for that release.

While uncertainties remain over potential writedowns related to the allegations, analysts take comfort in the company’s sizeable cash balances and relatively small debt maturities coming due in 2015.

“They have sufficient cash and balance sheet to get through (the first half of 2015) without having to come to market,” said a sell-side analyst in New York. “They are trying to remedy the situation.”

Petrobras has only US$1.25bn in international bonds maturing in 2015, compared to roughly US$6bn coming due in 2016 and around US$5.3bn in 2017, according to Thomson Reuters data.

In addition to overcoming the current accounting hurdles, other considerations might prompt the issuer to wait before pulling the trigger on new debt sales.

The syndicate banker, for example, argued that changes in the company’s senior management as part of a broader shift in the policy trajectory of re-elected President Dilma Rousseff might also influence the timing of a potential transaction.

“Petrobras could very well have some changes in personnel,” said the banker. “If you are sitting there and you don’t know whether you are going to have a job or not, you won’t do an US$8bn deal.”

Secondary markets would also need to adjust before the issuer decides to take the plunge.

Spreads on the company’s bonds widened sharply in the aftermath of a new round of arrests on Friday to reach record highs on Monday, before retracing somewhat.

Its 2024s were quoted at G-spreads of 392bp-398bp on Tuesday morning, while its 2044s were spotted at around 410bp-405bp.

The notes were issued at spreads of 350bp and 360bp respectively in March.

Reporting by Davide Scigliuzzo; Editing by Paul Kilby

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