T&T Oil Hits the Road

A long-awaited benchmark issue from Petroleum Co of Trinidad & Tobago (Petrotrin) appears to be on the way before the summer hiatus. The state-owned integrated oil company plans to begin a roadshow Wednesday in London that will hit the eastern US Thursday and Friday before finishing Monday in Los Angeles. It should be followed by a 144a/Reg S 2019 of “benchmark” size, likely $400m-$800m. Proceeds will fund construction of a gasoline optimization facility and ultra-low sulfur diesel plant that is a part of its clean energy program. Petrotrin’s outstanding 2022s were seen trading to yield a low 9% handle. As the bonds have an average life of 7-8 years, a yield of high 9%-low 10% area is expected on the new deal. The issuer will hope to generate the robust demand that fellow state-owned oil companies Ecopetrol, Petrobras and Pemex have enjoyed for their issues. But it will have to overcome negativity surrounding last week’s 1-notch downgrades to BBB and Baa3 by S&P and Moody’s, respectively. The agencies cut Friday, citing a weakening financial profile due to increased leverage and lower oil prices. “Petrotrin’s debt levels are expected to remain elevated over the next several years with no material deleveraging until 2012,” says Moody’s, which expects the sovereign to support the issuer. Credit Suisse and JPMorgan, winners of an RFP process earlier this year, are managing the new bond issue. LatAm issuance on tap for this week includes a $300m 2014 from Brazil’s Cosan as soon as today, and Mexico’s Alestra, with a $200m 2014 expected on Friday. Cosan is expected to yield around 10% and Alestra 11%-12%, say investors.