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Corporate deal of the quarter century: Petrobras

Sep 1, 2013

$11bn bond, 2013

Latin corporates have made increasingly daring forays into the bond markets: extending tenors, tweaking structures, restructuring debt and dabbling in currencies. Yet the overwhelming size of Petrobras's May 2013 bond sets it apart from others. The six-tranche bond is the largest-ever emerging market deal. That shows investor confidence in the state-controlled oil producer's fundamentals, growth strategy, and commitment to maintain its investment grade ratings, Petrobras's chief financial officer Almir Barbassa told LatinFinance when the deal was sold.

Petrobras timed the transaction well, hitting the market ahead of an uptick in US Treasury yields and dramatic EM portfolio outflows which started later in May. The deal offered fixed and floating rate tenors from three to thirty years and drew $45 billion in orders. With that it surpassed a $7.5 billion PDVSA bond sold in 2007 to become the largest-ever emerging markets transaction. Lead managers Banco do Brasil, Bank of America Merrill Lynch, Citi, HSBC, Itaú, JPMorgan and Morgan Stanley priced the tranches with a sufficient discount to allow a strong secondary market trading.

The sale, executed through the Petrobras Global Finance unit, raised cash for the firm's ambitious capital investment program of $236.7 billion between 2013 and 2017. LF



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