Petrobras Said to Plan $2.5 Billion 100-Year Bond Offering

(Bloomberg) -- Petroleo Brasileiro SA is selling $2.5 billion of 100-year bonds, returning to overseas capital markets for the first time since the emergence of a bribery scandal at the state-controlled oil company.

Petrobras is seeking to issue securities due in 2115 to yield 8.45 percent, said a person familiar with the matter who isn’t authorized to speak publicly and asked not to be identified. That is 0.4 percentage point lower than the initial price guidance from bankers earlier Monday.

The move reflects pent-up financing needs for a company that’s been shut out of the bond market since November, when a probe into executives who allegedly took bribes in return for billions of dollars of contracts caused borrowing costs to soar to a record. Petrobras’s notes have recovered in recent months after the producer delivered long-delayed audited financial results in April and replaced its chief executive officer.

“Petrobras successfully put what perhaps was the most spiny issue behind them when they issued their 3Q and 4Q14 audited financials,” Rafael Elias, a Latin America debt strategist at Credit Agricole, said in an e-mailed note to clients. “Bond will seem too attractive to pass for many.”

Petrobras, which would be the first emerging-market company to sell 100-year notes since 1997, is seeking to join Mexico in issuing so-called century bonds. Mexico has sold 100-year bonds abroad on five occasions since 2010 in three different currencies, raising almost $6 billion all together.

‘Seems Expensive’

Mexico’s $2.67 billion of dollar-denominated notes due 2110 yield 5.58 percent, data compiled by Bloomberg show. The country is rated two levels higher than Petrobras by Standard & Poor’s and five steps above by Moody’s Investors Service. Petrobras’s grade was cut to junk by Moody’s in February because of delays in releasing its audited financial results.

Petrobras’s longest-dated dollar bond matures in 2044 and yields 7.58 percent, data compiled by Bloomberg show. While that’s down one percentage point from a record high March 17, it’s still well above the 5.9 percent low it reached in August.


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