FPSO Aims for Bond Market

A Brazilian unit of SBM offshore is preparing a $500m bond transaction to finance a floating production, storage and offloading vessel (FPSO), according to a Fitch presale report, in what bankers say could be the first deal of its kind in LatAm. The 15-year bonds to be sold in the RegD market are secured by revenues from an 18-year contract between Petrobras and the Cidade de Anchieta vessel, which initiated production Monday. Proceeds from the issuance, rated BBB and to be done through the SBM Baleia Azul unit, will largely be used to repay SBM for most costs of refurbishment, according to Fitch. Noteholders will be assigned a collateral package that includes a pledge of the shares of the issuer and owner of the vessel, as well as a mortgage on the FPSO. “The market conditions should be supportive for this type of deal,” says a banker away from the transaction. The transaction would be similar in structure to Brazilian drillship financings including a $1.5bn 2021 bond from Odebrecht done last year, though bankers away from the transaction say it is the first time this type of structure would be used for an FPSO, an asset class more familiar to the loan market. OSX raised a $500m 3-year bond in March to help fund construction of an FPSO. This year also saw the region’s first wind energy project funded in the bond market, with Acciona raising $298m in 2031 bonds for projects in Mexico.