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Bondholders of Petrobras have tendered US$5.58 billion worth of bonds under a US$6-billion buyback program announced by Brazil’s state-run oil company. Of the total tendered, US$4.89 billion was dollar-denominated and the rest was in euros, according to securities filing on Thursday.
The buyback program will expire on February 8, and is part of Petrobras’ efforts to reduce its sizeable debt burden, which is the largest in the global oil industry at around US$130 billion.
When it announced the plan, the company said that it will repurchase US$2 billion worth of bonds in cash and the rest will be swapped for fresh debt. The initial target amount to be bought back was set at US$4 billion, but after a strong response from bondholders, Petrobras raised this to US$6 billion and extended the deadline for tendering the securities until February 8.
Seven series of both fixed-rate and floating-rate debt were targeted under the program, in total worth US$10 billion, and maturing in 2019 and 2020.
The Brazilian giant is still reeling from the combined blow of the oil price crash and a graft scandal that led to the ousting of the country’s President Dilma Rousseff. Besides debt refinancing, Petrobras has been selling assets in a bid to get back in its feet and has been aided in its efforts by the government. It last year approved legislation removing the requirement for Petrobras to be operator of all new projects in the potentially lucrative pre-salt layer of the Brazilian shelf with a minimum stake of 30 percent.
Things seem to be looking up, however. Earlier this month, the company said it was going to increase exploration, production, and refining expenditure by 30 percent with the outlays for 2017 seen at US$19 billion, up from US$14.6 billion last year. Cash on hand, according to CEO Pedro Parente, stood at US$22 billion at the start of this year, which would keep Petrobras active for another two years.
By Irina Slav for Oilprice.com
Irina is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing on the oil and gas industry.