Petrobras Seen Tapping Opportunistically

Brazilian oil giant Petrobras is targeting $67.0bn-$91.4bn in financing needs through 2015 as part of a $224.7bn investment plan over the next four years, while also seeking to divest up to $13.6bn in assets. Capex will be covered partly through cash on hand and the rest through new debt rather than equity. And while many bankers have their doubts that the Brazilian oil giant will try its chances in the international bond markets again this year after selling a whopping $6bn in new 5, 10 and 30-year bonds in January, others don’t discount the possibility. “To say that they are 100% unequivocally done, that is not the indication I understand they gave to the market. They will be opportunistic, but they are not going to go to the market when it is shaky. They will time it right,” says one DCM banker. Such opportunities still exist despite broader uncertainties as illustrated by last week’s well-timed 30-year debut from Brazilian petrochemical concern Braskem, which is indirectly held by Petrobras and came at a 5-10bp new issue premium partly thanks to the capped $500m size, the banker adds. With Petrobras typically looking to issue in size, it would likely have to offer a more generous premium of anywhere between 15-25bp to retap its outstanding debt, say investors, analysts and bankers. That would translate into a 4.48%-4.95% yield on a reopening of the 5.375% 2021s which have been trading around the 4.70% mark, though some investors see a new 10-year coming as tight as 4.75% under current conditions. As for a reopening of the 6.75% 2041s, some accounts see a 6.25% finish as reasonable. Substantial needs mean that Petrobras has long been looking to diversify its funding sources and relieve pressure from its core dollar market. But a euro or sterling trade may not be suitable against what remains an unsteady backdrop in Europe, though investors on both sides of the Atlantic are receptive to the credit. “When markets stabilize, Petrobras has that appeal and is viewed v