| SAO PAULO, April 8
SAO PAULO, April 8 Petroleo Brasileiro SA
borrowed 4 billion reais ($1.8 billion) in a 17-year
loan from Banco Bradesco SA to help pay for work on
the Abreu e Lima refinery in northeastern Brazil, a source with
direct knowledge of the deal said on Tuesday.
Petrobras, as Brazil's state-controlled oil producer is
known, will pay annual interest of 9.5 percent plus Brazil's TR
minimum savings remuneration rate, said the source, who declined
to be identified because terms of the deal are subject to
banking secrecy laws in Brazil. The TR yielded 0.3 percent in
the 12 months through the end of February, according to the
The Abreu e Lima Refinery, or RNEST, outside of Recife is
expected to cost $20 billion by the time it reaches full
operating capacity of 235,000 barrels a day in mid-2015.
When first proposed nearly a decade ago the refinery was
supposed to cost $4.8 billion. It is now years behind schedule
and Petroleos de Venezuela SA, which had planned to
take a 40 percent stake in the plant, has pulled out.
The loan comes as Petrobras, which has become involved in a
series of scandals entangling its management and cost-control
systems, addresses its fundraising needs for 2014. The company
has already raised $25 billion from bond sales this year.
Borrowing costs are rising for the Rio de Janeiro-based oil
major. Last month its debt ratings were cut by Standard and
Poor's in the wake of Brazil's sovereign rating downgrade.
On Monday, a source with direct knowledge of Petrobras'
plans told Reuters that Petrobras had shelved a 3 billion real
sale of infrastructure bonds in Brazil as well as a reopening of
bond sales in British pounds and euros.
The source said Petrobras was concerned the scandals might
limit demand or raise the cost of the sales. Petrobras denied
($1 = 2.20 Brazilian reais)
(Additional reporting by Jeb Blount in Rio de Janeiro; Editing
by Phil Berlowitz)