September 18, 2017 / 12:26 PM / a month ago

Petrobras sells $2 billion in bonds, replacing costlier debt

The logo of Brazil's state-run Petrobras oil company is seen on a tank in at Petrobras Paulinia refinery in Paulinia, Brazil July 1, 2017. REUTERS/Paulo Whitaker

SAO PAULO/NEW YORK (Reuters) - State-controlled Petróleo Brasileiro SA raised $2 billion from the sale of seven- and 10-year securities, replacing more expensive shorter-dated bonds as it seeks to trim a debt burden that is the largest among major oil firms.

Two people with direct knowledge of the deal said on Monday that Petrobras sold $1 billion each worth of senior unsecured bonds due in 2025 and 2028, respectively. The people said Petrobras sold the January 2025 bond at a yield of 5.3 percent, and the January 2028 bond at 6 percent.

The company had proposed interest of between 5.35 percent and 5.5 percent for the 2025 security, and around 6 percent for the note due in 2028.

Simultaneously, Petrobras has proposed that holders of different notes maturing between 2019 and 2021 either tender their debt or swap it for longer-dated securities. The deadline for the swap and repurchase tenders is 5 p.m. ET (2100 GMT) on Sept. 22, the filing said.

The transaction, which follows a significant improvement in Brazil’s investment risk profile, underscores how Petrobras has regained the ability to obtain financing, both locally and overseas, amid efforts by Chief Executive Officer Pedro Parente to cut $85 billion of net debt.

Over the past week, Petrobras has refinanced over $2 billion in trade finance and other types of loans with local and international lenders, smoothing out looming amortizations through the end of the decade.

Rio de Janeiro-based Petrobras , Brazil’s largest state-controlled firm, has been forced to sell assets and slash spending as it recovers from the plunge in oil prices and a giant price-fixing, bribery and political kickback scandal.

It has hired the investment-banking units of Bank of America Corp, Banco do Brasil SA, Citigroup Inc, Credit Agricole SA, HSBC Holdings Plc, JPMorgan Chase & Co, and Banco Santander SA to manage the offering.

Following is a table with the debt securities that Petrobras seeks to either swap or repurchase through the week. Petrobras has imposed a $500 million limit for the debt repurchase plan.

Reporting by Guillermo Parra-Bernal; Editing by Paul Simao and Jonathan Oatis

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