RIO DE JANEIRO—Brazilian state-run oil company
Petróleo Brasileiro SA approved the sale of up to 3
billion reais ($1 billion) in debentures on the local debt market
in 2015, the company said in a filing late Friday.
Petrobras has no specific timeline for the transaction, which
will depend on market conditions.
Chief Financial Officer Ivan Monteiro said in a news conference
on Friday that Petrobras may consider issuing debt whenever it
believes the interest rates would fall in line with its current
benchmark bond yield.
Petrobras has tapped U.S. and European debt markets for tens of
billions of dollars in financing in recent years, paying
yield-starved investors there interest rates that often fell below
5%. Rates tend to be significantly higher in the Brazilian market,
however, where the current interbank lending rate stands at
13.13%.
Petrobras' free cash flow remains deeply negative as it
continues to invest heavily to develop ultra-deep water oil
reserves off the coast of Brazil.
On Friday, the company said interest and amortizations on
existing debt are expected to cost $21 billion this year, and
capital expenditures are forecast at $29 billion. The company's
operations, on the other hand, are only seen generating $25 billion
in cash during 2015.
But with the biggest debt load of any major oil company,
investors' willingness to lend more money to Petrobras at
affordable interest rates remains to be seen. A corruption
investigation by federal prosecutors alleging a massive bribery and
kickback scheme around the company further damaged its
credibility.
Petrobras wrote off more than $2 billion in 2014 related to the
corruption allegations. The company considers itself a victim of
the scheme and has begun filing a series of lawsuits against
contractors that allegedly profited from it.
Write to Paul Kiernan at paul.kiernan@wsj.com
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