By Guillermo Parra-Bernal
SAO PAULO Feb 19 Petróleo Brasileiro SA
is considering the sale of about 3 billion reais
($1.26 billion) in local notes to fund infrastructure projects,
helping the state-controlled oil company tap investors beyond
its traditional base, a source with direct knowledge of the
The Rio de Janeiro-based company, which has not sold senior
debt in the domestic market in 12 years, is discussing with
banks how to place an offering of so-called infrastructure
debentures soon, the source, who requested anonymity because the
plan is in the works, said earlier this week. The
inflation-linked notes would be split into different maturities,
the source added.
Petrobras, as the company is known, wants to follow in the
footsteps of Vale SA, which last month raised 1
billion reais in a similar transaction. Robust demand for the
notes allowed Vale, the world's largest iron ore producer, to
borrow at costs below those available to Brazil's federal
The domestic debt offering could also help Petrobras buy
time ahead of a planned comeback to international debt markets.
According to the source, the company wants to clinch the sale of
dollar-denominated bonds during the first half and extend a
successful offering of securities denominated in the euro and
British pound in the second half.
A Petrobras deal could increase the infrastructure debenture
market's visibility, as companies and the government seek funds
for much-needed road, port and airport projects. Sales of the
notes could reach 9.5 billion reais this year, more than twice
the 4.5 billion reais sold in 2013, Luciano Coutinho, president
of state development bank BNDES, said last year.
If successful, Petrobras' sale would be the biggest single
offering of Brazilian infrastructure debentures since the market
took off a couple of years ago. A Petrobras spokesman did not
have an immediate comment.
Petrobras was named the world's most indebted company in a
report last year by Bank of America Merrill Lynch. The company
has increased the size of its annual bond sales in U.S. dollars
each year since at least 2009, driving borrowing costs higher.
Petrobras in May sold $11 billion of dollar bonds in the
largest-ever bond offering by a Latin American company. The same
source told Reuters recently that the company could place
between $10 billion and $13 billion worth of bonds in
international markets in 2014.
The company faces financing needs of nearly $18 billion next
Both Petrobras and Vale, which is also based in Rio de
Janeiro, need to raise money for programmed investments and
other corporate purposes this year earlier than usual to
mitigate fund-raising risk ahead of a presidential election in
Brazil and the U.S. Federal Reserve's expected wind-down of
Vale wants to sell 10-year dollar bonds in global markets
According to the source, the success of Vale's
infrastructure debenture offering paved the way for Petrobras to
try the relatively new market, which in less than two years of
existence has struggled to generate a significant dealflow but
now is showing signs of finally taking off.
Vale sold 550 million reais in seven-year notes and 150
million reais in 10-year notes, both inflation-linked
securities, with yields about 0.15 percentage points and 0.10
percentage points below the normal cost of borrowing for the
Brazilian government in comparable maturities.
The company also sold 12-year and 15-year notes in the
Investors placed bids worth about 3.5 billion reais for
Vale's infrastructure debentures, 3.5 times the amount finally
sold. About 3.2 billion reais worth of bids came from individual