Petrobras receives $5bn loan from Chinese development bank

Petrobras receives $5bn loan from Chinese development bank

Brazil China Bonds

Brazil's state-owned company Petrobras said it has reached a 10-year $5bn financing agreement with the China Development Bank (CDB), becoming the latest Latin American issuer to turn to China for financing.

The loan is part of a $10bn term sheet that Petrobras signed with the CDB in February, Petrobras said in a statement. Petrobras also said it agreed to sell 100,000 barrels of oil per day for 10 years to China National United Oil Corporation, China Zhenhua Oil and Chemchina Petrochemical Co.

The agreements come as Petrobras works to sell off assets and overhaul its finances to reduce some $125bn in debt. The company is working to sell $15.1bn in assets by the end of the year and $19.5bn in 2016-2017. A Brazilian federal court, however, recently ordered Petrobras to suspend all but five assets sales that are underway until further notice.

On Friday, Petrobras also said its subsidiary Petrobras Biocombustivel sold its 49% stake in the Nova Fronteira Bioenergia joint venture to its partner Sao Martinho. Petrobras will receive a 6.59% stake in Sao Martinho, one of the largest sugar and ethanol producers in Brazil.

Petrobras said the $133m sale, which is pending regulatory approval, will count towards its asset sale target for 2016. Nova Fronteira operates an ethanol production plant in the state of Goias.

In recent years, Chinese state banks have reached financing agreements with governments and companies throughout Latin America, often when some of them faced financial distress. China has made billions of dollars in loans to Venezuela in exchange for oil from Venezuela’s state-owned oil company PDVSA.