Petrobras sails into Europe with record-setter
A four-tranche bond sale by the Brazilian quasi-sovereign comes as Latin American borrowers increasingly consider funding in euros over dollars
Petrobras on Tuesday became the first Latin American
borrower to tap the cross-border bond market in 2014, turning
to European investors for a $5 billion-equivalent deal that
could herald a trend away from funding in dollars.
The Brazilian oil firm's bond was split into three
euro-denominated tranches totaling €3.05 billion ($4.15
billion), and a £600 million ($984 million) sterling
tranche. The deal is the largest ever by an emerging market
borrower in European currencies, according to Dealogic.
The bond sale picked up on an improving basis swap for
borrowers in the euro market, which could entice more Latin
American issuers. Lower benchmark rates in Europe - driven by
the central bank's continued stimulus program - could further
encourage borrowers away from the dollar market.
Market participants nonetheless highlight that the European
investor base is smaller than that of the US. Similarly, some
smaller issuers prefer to maintain liquidity in an existing
The arranging banks priced Petrobras' deal as much as 50
basis points tighter than where the quasi-sovereign might have
funded in the dollar market, people following the transaction
Brazil's development bank,
BNDES, finished investor meetings in Europe today and could
be the next LatAm borrower to issue in euros.
See complete pricing details on
Petrobras' bond sale in
LatinFinance's Daily Brief.