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Oil Capped By COVID Fears

Oil Capped By COVID Fears

Oil prices rose this week…

Brazil’s Oil Major Petrobras To Tap Global Bond Market

Petrobras plans to issue one or more series of global bonds in the U.S. market, subject to market conditions, Brazil’s state-held oil firm said on Wednesday, without specifying amounts.

Petrobras Global Finance (PFG), a wholly owned subsidiary of Petrobras, will offer the bonds, which will be fully and unconditionally guaranteed by the parent company.   

The Brazilian oil firm has hired BNP Paribas Securities, BofA Securities, Itau BBA USA Securities, J.P. Morgan Securities LLC, Scotia Capital (USA), and SMBC Nikko Securities Americas to conduct the bond issue as coordinators, Petrobras said in a statement.

PGF will use the net proceeds from the bond issue for general corporate purposes.

Earlier this month, Petrobras was said to have suspended preparations to sell a minority stake in a cluster of four offshore fields producing 230,000 bpd.

Petrobras has been selling non-core assets and minority stakes in oilfields in Brazil and elsewhere, aiming to cut its massive debt. But the coronavirus pandemic and the oil price crash that followed have upended Petrobras’s plans to proceed with a sale of a minority stake in the Marlim cluster of four oilfields, according to Reuters sources.

Moreover, the coronavirus pandemic spiraling out of control in Brazil could crush its oil industry, analysts say. Apart from the health of the offshore oil workers, Brazil’s oil sector is threatened by the low oil prices and the economic downturn in the country and in the world. Being state-held, Petrobras’s ratings are closely related to the credit rating of Brazil.

Earlier this month, Fitch Ratings revised the outlook for the international long-term ratings of several Brazilian corporates, including Petrobras, to ‘negative’ from ‘stable’ after it revised Brazil’s Sovereign Rating Outlook to ‘negative’ from ‘stable’. Fitch affirmed Petrobras’s BB- long-term issuer default rating, but the outlook is now ‘negative’ compared to ‘stable’ prior to the latest rating action.   

By Tsvetana Paraskova for Oilprice.com

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