Petrobras Price Heard Still to Be Decided

Petrobras is still in talks with the government to set a price for 5bn barrels of oil reserves that will be swapped for company shares in a planned equity transaction, according to remarks from finance minister Guido Mantega, cited in local news and wire reports. Recent news reports on the price are based on speculation, Mantega says. Rumors of disagreement over the price, and more importantly the delay to the much anticipated $50bn-$70bn transaction, have increased through August. The government had said it would conclude price evaluations by the end of August, in order to proceed with plans to have the sale by September 30. Investors and analysts say a price does not necessarily need to be agreed by today for the sale to proceed on schedule, but likely in the next 1-2 weeks. The portion of the deal to hit the public markets should be $20bn-$30bn, with total size depending greatly on whether new barrels price closer to $5, as the market would like, or $9, as the government prefers. Bank of America Merrill Lynch, Bradesco, Citi, Itau, Morgan Stanley and Santander are global coordinators, with Banco do Brasil managing the domestic retail portion. Others, including BTG, Credit Suisse, Goldman and JPMorgan are expected to be added to a bookrunner tier.