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Petrobras Closes $6.75 Billion International Notes Offering
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Brazil's state-run energy giant Petroleo Brasileiro S.A., orPetrobras (PBR - Free Report) – having the highest debt load in the oil industry – has closed the offering of 5-year and 10-year notes having a combined value of $6.75 billion.
Most importantly, the company issued the international bond for the first time in a year to buy back notes that will mature in the coming years.
In detail, Petrobras has offered five-year notes worth $5 billion having 8.375% yield along with $1.75 billion in 10-year notes that yield 8.750%. From the sale proceeds, the integrated energy player will likely buy back notes having a principal amount of $3 billion and about to mature by 2018. Investors should know that Moody's Investors Service – a leading provider of credit ratings – has rated the global bonds as "B3". The rating is six notches below the investment grade.
The record high rate that the company is offering reflects its weak fundamentals. In other words, Petrobras hasn’t been in good shape since it got involved in a multimillion dollar money laundering scam. The Brazilian police recently pursued their raid for the second day chasing a firm that allegedly received money from Petrobras for a contract. Also, the business scenario for the energy players has not been favorable for a long time following weak oil and gas prices, although crude has started taking a bullish turn.
However, most of the analysts believe that the proceeds from all the new bonds will definitely be used for the benefit of the company or in other words to salvage it.
Headquartered in Rio de Janeiro, Petrobras is the largest integrated energy firm in Brazil and one of the largest in Latin America. The company’s activities include: exploration, exploitation and production of oil from reservoir wells, shale and other rocks, as well as refining, processing, trading and transportation of oil and oil products, natural gas and other fluid hydrocarbons, in addition to the other energy-related activities.
The company currently carries a Zacks Rank #3 (Hold). Some better-ranked players in the energy sector include McDermott International Inc. , PetroChina Co. Ltd. and Murphy USA Inc. (MUSA - Free Report) . Each of these stocks sports a Zacks Rank #1 (Strong Buy).
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Petrobras Closes $6.75 Billion International Notes Offering
Brazil's state-run energy giant Petroleo Brasileiro S.A., or Petrobras (PBR - Free Report) – having the highest debt load in the oil industry – has closed the offering of 5-year and 10-year notes having a combined value of $6.75 billion.
Most importantly, the company issued the international bond for the first time in a year to buy back notes that will mature in the coming years.
In detail, Petrobras has offered five-year notes worth $5 billion having 8.375% yield along with $1.75 billion in 10-year notes that yield 8.750%. From the sale proceeds, the integrated energy player will likely buy back notes having a principal amount of $3 billion and about to mature by 2018. Investors should know that Moody's Investors Service – a leading provider of credit ratings – has rated the global bonds as "B3". The rating is six notches below the investment grade.
The record high rate that the company is offering reflects its weak fundamentals. In other words, Petrobras hasn’t been in good shape since it got involved in a multimillion dollar money laundering scam. The Brazilian police recently pursued their raid for the second day chasing a firm that allegedly received money from Petrobras for a contract. Also, the business scenario for the energy players has not been favorable for a long time following weak oil and gas prices, although crude has started taking a bullish turn.
However, most of the analysts believe that the proceeds from all the new bonds will definitely be used for the benefit of the company or in other words to salvage it.
Headquartered in Rio de Janeiro, Petrobras is the largest integrated energy firm in Brazil and one of the largest in Latin America. The company’s activities include: exploration, exploitation and production of oil from reservoir wells, shale and other rocks, as well as refining, processing, trading and transportation of oil and oil products, natural gas and other fluid hydrocarbons, in addition to the other energy-related activities.
The company currently carries a Zacks Rank #3 (Hold). Some better-ranked players in the energy sector include McDermott International Inc. , PetroChina Co. Ltd. and Murphy USA Inc. (MUSA - Free Report) . Each of these stocks sports a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>