17 de mayo de 2016 / 12:32 / en 2 años

UPDATE 3-Petrobras paves path for corporates with jumbo bond

(Adds new details and quotes)

By Mike Gambale and Paul Kilby

NEW YORK, May 17 (IFR) - Oil firm Petrobras opened the door for Brazilian corporates on Tuesday after printing a US$6.75bn two-part bond - the first domestic company to sell a crossborder issue since June 2015.

The deal - coming less than a week after Congress agreed to start impeachment proceedings against former president Dilma Rousseff and replace her with business friendly Michel Temer - got orders of close to US$20bn.

This strong demand helped the state-controlled entity squeeze pricing 25bp-37.5bp before printing at a final yield of 8.625% on a US$5bn five-year and 9.00% on US$1.75bn 10-year.

The large order book underscored appetite for a credit seen benefiting from the recent change to a government capable of reviving economic growth in Brazil.

“Temer is a game-changer and structural reforms will put Brazil on a better footing and be a catalyst for Brazilian spreads to rally from here,” Kevin Ritter, a portfolio manager at Western Asset Management, told IFR.

The country’s bond prices have rallied extensively during the run-up to the final decision on impeachment, with yields on Petrobras’ 2024s narrowing about 175bp since early April, according to Thomson Reuters data.

This bodes well for other Brazilian corporates looking to tap what may be a brief window of opportunity.

“With the sovereign potentially moving in the direction of greater fiscal discipline, it would be a good time to come to market,” said Kathleen Gaffney, a portfolio manager at Eaton Vance.

“But a lot of that will depend on risk appetite and stability in the global markets.”

For now, Temer has won the market’s praise following a raft of new appointments of top executives and ministers this week.

This included a new CEO for Petrobras - Pedro Parente - according to local press reports.

He is the former executive at grain exporter Bunge Brasil and once the chief of staff for ex-president Fernando Henrique Cardoso, who helped tame the country’s hyper inflation in the 1990s.

“We see him as credible, capable and market friendly,” said Mark Hughes, an EM debt analyst at Western Asset.


Petrobras is tapping the market for the first time in years as a junk rated creditor and it paid up to do so.

This new deal, rated B3/B+/BB, came with bigger yield than Petrobras’s 100-year Ba2/BBB-/BBB- rated bond, for example, which printed in June last year at 8.45%.

Pricing however looked juicy against the Brazilian sovereign and other Latin American oil names.

Petrobras’s new 10-year bond, for example, came a good 300bp wide to Brazil’s existing 2025s, which are being spotted at 5.5%.

Other state-owned oil companies like Colombia’s Ecopetrol and Mexico’s Pemex are now trading closer to 200bp over their sovereign bond curves.

“It is the cheapest quasi sovereign out there,” one investor told IFR.

Still some felt the new issue premiums on the bond were tight for a company that is still facing considerable challenges.

One banker away from the deal put fair value on a new five and 10-year from Petrobras at 8.50% and 8.625%-8.75%, respectively. That meant the new bonds were priced with a premium of just 12.5bp on the five-year and as tight as 25bp on the 10-year.

Petrobras will be using the proceeds to finance a multi-billion debt tender and address a worrisome wall of bond maturities falling due over the coming years.

It is buying back up to US$3bn of bonds maturing between 2017 and 2019 and US$576.78m in outstanding 8.375% 2018s, under the tender.

Investors expect the company to retire even more debt with the US$6.75bn it raised on Tuesday.

Active bookrunners are BB Securities, JP Morgan, Bank of America Merrill Lynch and Santander. (Reporting by Mike Gambale and Paul Kilby; Writing by Natalie Harrison; Editing by Marc Carnegie and Shankar Ramakrishnan)

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