Petrobras Energia sent a letter to the Buenos Aires stock market last week seeking authorization for the bond issue under its US$2.5bn bond program. The funds would be used to renegotiate Petrobras Energia's remaining US$150mn debt from the US$300mn debt that expires this year, the source said.
Other options include rolling over the debt in the local market, or securing capital support from the parent company, Brazil's federal energy company Petrobras, the source said.
But Petrobras Energia favors bonds because credit is still scarce on the Argentine market, and the company wants to maintain financial independence from Petrobras, the source added. The issue would be the company's first on international capital markets since the devaluation of the Argentine peso in early 2002, and it is not clear how a bond issue by an Argentine company will be received. "We would want a reasonable interest rate, and we won't pay just anything, so you have to consider we belong to a country that is in default and has not restructured its debt, that situation doesn't help us much," the source said.
Petrobras Energia issued US$35mn in bonds on the local market in March to renegotiate debt from 2001, but that was a much smaller amount than this issue. "You can still get US$35mn credit in Argentina, especially because there are not many companies seeking financing, but when you talk about US$100mn or more it becomes very complicated," the source said. The devaluation of the currency is mainly to blame for the lack of US dollar denominated credit, and local banks are still struggling which means the availability of liquidity is limited, the source said.
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