Petrobras Working on $10bn Loan

Brazil’s Petrobras is negotiating the terms of a $10bn loan with the China Development Bank after signing a memorandum of understanding last week, a company spokeswoman says. The potential jumbo liquidity injection may provide much needed relief to Petrobras, which seeks to invest $174bn in the coming 5 years on new exploration and refining. The company has approached the loan and bond markets, clinching upwards of $5bn in bilateral loans and $1.5bn in 10-year bonds in the past month. A $10bn facility from China would take some pressure off its financing team, which is struggling with skittish bond markets and expensive terms in the bank market. “Petrobras has more [financing] needs than they have market sources, so they’re being creative in terms of their funding sources,” says Anne Milne, corporate debt strategist at Deutsche Bank. She adds Petrobras had probably considered the China option in the past, but decided to go ahead with it when it became clear other liquidity channels were drying up. In the MOU signed with China, Petrobras agreed to sell oil to Sinopec’s China Petrochemical Corp.