Petrobras Raises US$ 500 Million in Global Notes

Petrobras says that through its wholly-owned subsidiary Petrobras International Finance Company ("PIFCo), closes on this date the placement at the international capital market of US $500 million in Global Notes.

The bonds have a yield to investor of 6.185%, a 10-year maturity term, and represent PIFCo's lowest placement cost for equivalent term, the rate being 1.55% superior to the American Treasury Security with similar term. The global notes were offered by 99.557% of the face-value, with coupon of 6.125% p.a.

The operation represents Petrobras' first issue after receiving the investment grade classification by Moody's and its main purposes were to keep the presence of the Company at the capital market, to establish a new cost referential which reflects the current financing conditions of the Company, and to access a new base of investors associated to the high grade market. Moreover, the Company improved its covenants to reflect its investment grade condition.

The Company has received tender offers of nearly US$ 1.3 billion and the pricing occurred on September 29, 2006. The wide selling of bonds recognizes Petrobras' credit quality in international capital markets, with approximately 85% of the bonds being placed in "investment grade" markets.

The issue's strategy is aligned to the buyback of old bonds, recently effected by the Company, which were issued with higher coupons.

The operation was conducted by Morgan Stanley & Co. Incorporated and UBS Securities.


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