Petrobras adopted a strategy of looking outfor opportunities, over the course of the year, to access the market at moments when the volatility and costs were at their lowest levels
PLAN for securing funding is successful
In 2008, there was considerable volatility in the financial markets, particularly in the second half of the year, when the effects of the U.S. mortgage crisis spread through the world economy. The fallout from that crisis hit the financial sector very hard and spilled over into the real economy, through drastically reduced access to credit and high cost of new transactions.
Nevertheless, Petrobras successfully pushed through its planned funding for 2008 and adopted a strategy of looking out for opportunities, over the course of the year, to access the market at moments when the volatility and costs were at their lowest levels. In January 2008, Petrobras International Finance Company (PIFCo), a fully-owned subsidiary of Petrobras, reopened a securities offering in the international capital markets, at a coupon rate of 5.875% and maturity in March 2018, for the sum of US$ 750 million, offering a return on investment of 5.86% p.a.. This issue was considered to be an outstanding success, representing the lowest historical cost to a Brazilian company in the market for dollar denominated debt instruments, and was taken up by more than 60 investors, most of whom specialize in the fixed income market for investment grade companies.
The company raised R$ 400 million in the domestic market, through a private issue of CRIs (Certificate of Real Estate Receivables), which were fully taken up by financial institutions. These funds were channeled into two different projects: extending the dry dock in Rio Grande do Sul, to augment the capacity for constructing or repairing platforms, and the construction of a new administrative office in Vitória. In spite of the tight capital market, this financing was obtained at an attractive cost, with repayment extending up to 15 years. Approximately R$ 300 million will be required to finish off the building in Vitória, and Petrobras intends to raise this sum in the capital market, depending on the prevailing conditions.
In the banking market, 2008 was also marked by Petrobras’ return to raising funds regularly in the domestic market, spurred by the limited credit available in the international markets and the Brazilian banking system’s more flexible limits on lending to the company. Contracts were signed for real denominated borrowing amounting to the equivalent of US$ 2.86 billion. Lines of credit totaling US$ 580 million were also obtained in the international banking markets. The key, in both cases, was the meeting of the company’s strategic objectives and the securing of the cash resources for its activities. And this was achieved at competitive prices, given the market context brought about by the international crisis.
Under its Export Credit Agency (ECA) financing, Petrobras raised a total of US$ 1.5 billion, through PNBV. Of that amount, US$ 200 million was provided by the banks BNP Paribas (France), Sumitomo (Japan) and BBVA (Spain), with credit insurance provided by Sace, the Italian ECA; around US$ 800 million came from the Japanese banks Sumitomo, Mizuho and Tokyo Mitsubishi, with credit insurance provided by the Japanese ECA, Nexi; and US$ 500 million was financed directly by EDC, of Canada.
Bank guarantees amounting to US$ 10.3 billion, 52.1% higher than in the previous year, were obtained in the domestic and international markets, in support of the company’s activities.
FINANCING AND STR UCT URED LOANS
In the Gas & Energy segment, the Brazilian Development Bank (BNDES) disbursed US$ 750 million in funds provided by the China Development Bank, through an on-lending transaction, for the Gasene (Southeast- Northeast gas pipeline interconnection) project. In February, the bridging loans provided by the BNDES were settled using a long-term facility extended by that same institution in December 2007.
The Companhia Mexilhão do Brasil (CMB), a special purpose company (SPC), signed a contract with the BNDES for financing amounting to R$ 528 million, which has already been drawn down, for the construction of the Mexilhão 1 Platform (PMXL-1), which is to be operated by Petrobras. This financing is valid for the duration of the platform construction phase, and may subsequently be replaced by a long-term facility.
The BNDES also disbursed the sum of R$ 1.03 billion, over the course of 2008, in relation to a R$ 2.49 billion long-term financing contract signed in December 2007, for the Urucu-Coari-Manaus Project.
The first steps were taken for the financial alignment of certain projects, including the Belém Project, the CBIO Itarumã Project, the Comperj Utilities Center and the Port of Suape. with a view to structuring the securing of future funding over the course of the 2009 financial year