Brazil’s state-run oil giant Petroleo Brasileiro S.A. or Petrobras (NYSE:PBR) recently announced that it has issued $4 billion in bonds in the global capital market. Almost 77% of the investors are expected from North America, while 19% are likely to be from Europe. It is to be noted that the average interest rate that investors will receive is likely to be the company's lowest since 2013.
About the Transaction
Petrobras issued the bonds through its wholly owned subsidiary, Petrobras Global Finance B.V. The company was able to price the bonds at a favorable rate on May 15, 2017 as President Temer‘s economic policies were questioned afterward, following corruption allegations on him.
The notes – which are scheduled to mature in 2022, 2027 and 2044 – amounted to $1 billion, $2 billion and $1 billion, respectively. Investors will receive interests twice every year.
Reason for the Bond Issuance
The company plans to utilize the net proceeds from the transaction to pay the recovery price of its existing bonds that are due next year. If there is any amount remaining out of the proceeds, after paying the outstanding notes due next year, it will be used for other corporate needs. We note that the company has to shoulder debt of almost $30 billion, due this year and the next.
About the Company
Petrobras is an integrated energy company involved in the exploration, production, refining, retailing and transportation of petroleum and its byproducts, both domestically and internationally. The Brazilian multinational corporation is headquartered in Rio de Janeiro.
Price Performance
In the last one year, Petrobras’ shares gained 42.65%, outperforming the Zacks categorized Emerging Markets Integrated industry’s increase of 25.84%.
Zacks Rank and Stocks to Consider
Petrobras presently has a Zacks Rank #3 (Hold). Some better-ranked stocks in oil and energy sector are Delek US Holdings, Inc. (NYSE:DK) , Enbridge Energy, L.P. (NYSE:EEP) and Canadian Natural Resources Limited (TO:CNQ) . Each of these stocks flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Delek US Holdings’ sales for the current year are expected to increase 73.24% year over year. The company recorded a positive average earnings surprise of 60.68% in the last four quarters.
Enbridge Energy’s sales for the current quarter are expected to increase 13.17% year over year. The partnership recorded a positive earnings surprise of 38.22% in the last four quarters.
Canadian Natural Resources’ sales for the current quarter are expected to increase 26.93% year over year. The company recorded a positive average earnings surprise of 30.77% in the first quarter of 2017.
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Petroleo Brasileiro S.A.- Petrobras (PBR): Free Stock Analysis Report
Enbridge Energy, L.P. (EEP): Free Stock Analysis Report
Delek US Holdings, Inc. (DK): Free Stock Analysis Report
Canadian Natural Resources Limited (CNQ): Free Stock Analysis Report
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