Petroleo Brasileiro SA Petrobras (NYSE:PBR) Prices New Global Notes To Pay Matured Debt


The world most indebted oil company, Petroleo Brasileiro SA Petrobras (NYSE:PBR) is sinking deeper into debt with the pricing of new global notes as it looks to raise capital to repurchase matured debt. In a press release, the oil giant has confirmed the pricing of the notes in dollars through its subsidiary Petrobras Global Finance PGF.

Terms of Offering

Petrobras is set to issue 6.125% Notes due in 2022. Interest payment on the notes will be made on January 17 and July 17 of every year starting July 17, 2017. The company expects net proceeds of $2 billion from the offering.

The embattled oil company is also offering 7.375% Global Notes due in 2027 from which it expects to generate $2 billion in net proceeds. Interest payment on the second offering will also be made on January 17 and July 17 of every year starting this year. The timing of the new offering could not have been better given that Brazilian bonds have been on an impressive run ever since Donald Trump won the U.S presidential elections.

Net proceeds from the offering are to be used to purchase any matured Notes tendered and accepted by PGF. Any remaining amount from the offering is to be used for general corporate purposes. The pricing of the two Global Notes does not come as a surprise given that the Brazilian company is in dire need of cash to meet its many financial obligations.

Paying Debt

Oil prices plunging to multi-year lows last year made it impossible for a good number of companies to generate enough money to finance projects let alone pay for maturing debt. Tapping into the debt market to pay back debt has since become the order of the day for most companies looking to stay afloat.

Petrobras is aggressively trying to regain its footing having seen its sentiments and prospects dashed by a corruption scandal that has already had a broad impact on the country’s political and business class. Shedding of assets to pay debt has already come into play as the company looks to improve its credit standing.

Petrobras stock was up by 1.75% in Tuesday trading ending the day at highs of $11.02 a share.

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