Petrobras Prices Notes - Analyst Blog
January 08 2014 - 3:50PM
Zacks
Brazilian state-run energy giant,
Petroleo Brasileiro SA or
Petrobras (PBR) announced the pricing of its euro
and pound denominated notes. The company intends to use the
proceeds to finance its $237 billion 2013–2017 Business and
Management Plan.
The largest offering was that of the €1.5 billion 4-year note,
priced at 99.705% and yielding 2.829%. Petrobras also put on offer
a €750 million 7-year note priced at 99.402% and with a yield of
3.849% as well as an €800 million 11-year note priced at 99.204%
and with a yield of 4.845%. Moreover, the company priced the £600
million 20-year note at 98.845% and with a yield of 6.732%.
The offering is expected to close on Jan 14, 2014. According to a
person well informed about the deal, the offering received huge
response from investors with the issue getting over €12
billion.
Petrobras is the largest integrated energy firm in Brazil and one
of the largest in Latin America. The long-term outlook on the
company looks promising with its strong pipeline of development
projects and impressive exploration successes. Also, the fact that
the Brazilian government has allowed Petrobras to raise diesel
prices is encouraging.
However, this ambitious five-year investment program could
substantially increase the company’s leverage and deteriorate its
credit metrics during the current downturn in the economic cycle.
Additionally, the company’s declining production trend is a
concern.
Headquartered in Rio de Janeiro, Petrobras currently holds a Zacks
Rank #3 (Hold), implying that it is expected to perform in line
with the broader U.S. equity market over the next one to three
months.
Meanwhile, one can consider better-ranked players in the energy
sector like Harvest Natural Resources Inc. (HNR),
Seadrill Partners LLC (SDLP) and Athlon
Energy Inc. (ATHL). All these stocks currently sport a
Zacks Rank #1 (Strong Buy).
ATHLON ENERGY (ATHL): Free Stock Analysis Report
HARVEST NATURAL (HNR): Free Stock Analysis Report
PETROBRAS-ADR C (PBR): Free Stock Analysis Report
SEADRILL PTNRS (SDLP): Free Stock Analysis Report
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