Petrobras Seeks $1 Billion China Loan Faster Than Planned
(Bloomberg) - Brazil’s state-controlled oil company Petrobras is seeking a $1 billion loan from the Export-Import Bank of China before originally planned as its debt service costs surge in the coming years amid the worst oil market in a generation.
Petroleo Brasileiro SA, as it is formally known, is negotiating a definitive contract with the Chinese lender after signing a term sheet, the Rio de Janeiro-based producer said Monday in a filing. The financing is tied to equipment and service contracts from Chinese suppliers, and was originally planned for 2017, it said.
The oil producer, which has been mired in Brazil’s biggest corruption investigation known as Carwash, has been leaning more heavily on Chinese lenders recently at a time ratings downgrades, the rout in oil prices, and Brazil’s recession have led to higher borrowing costs in international debt markets. China has invested in oil-rich nations to ensure supplies to the world’s second-biggest crude market after the U.S., and similar deals have helped Venezuela fund its ballooning debt.
In February, Petrobras secured a $10 billion loan from China Development Bank Corp. that is part of a deal to supply crude to the Asian country. The $1 billion loan announced Monday is part of Petrobras’ strategy of diversifying its financing sources, it said.
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