QGOG Floats Debut Corporate Bond

Queiroz Galvao Oleo e Gas (QGOG) has issued its first non-project bond in the cross-border markets, raising $700m, up from an originally planned $600m. The BB+/BB minus Brazilian oil services provider drew more than $3bn in orders. The 2019 NC4 priced at 98.612 with a 6.250% coupon to yield 6.500%, at the tight end 6.750%-area guidance revised from 7.000%-area. Investors put in for more than $3bn in orders, with some noting a pickup. “It’s a great credit, and this deal came 200bp-300bp back to existing bonds,” says a participating EM portfolio manager, referring to the issuer’s investment-grade project bond. Closer comps were difficult to find. Among other considerations, investors saw QGOG’s predictable cash flows from its Petrobras contracts offsetting the issuer’s 6x-plus net leverage. Nearly 200 accounts participated, according to people familiar with the sale. Proceeds from the issuance will be used to refinance short-term debt. BAML, HSBC and Citi managed the transaction, done the QGOG Constelation unit. QGOG had previously tapped the project bond market last year, raising a $700m 7-year drillship securitization priced to yield 5.45%.