Petrobras reconvenes regular counsel for historic bond issuance

January 28, 2011 10:39 AM

US firm Cleary Gottlieb Steen & Hamilton LLP and Walkers in the Cayman Islands advised Pifco, Petrobras' finance company, on a US$6 billion international bond issuance– the largest ever corporate bond offering by a Brazilian company in the international markets.

Some of the money secured through this issuance will go to pre-salt exploration
The bonds were issued yesterday, with Mattos Filho, Veiga Filho, Marrey Jr e Quiroga Advogados and Shearman & Sterling LLP advising the lead managers, Credit Agricole and Mitsubishi UFJ Securities. BTG Pactual US Capital Corp, Citigroup Global Markets, Itau BBA USA Securities, HSBC Securities, JP Morgan Securities and Santander Investment Securities acted as joint bookrunners.

The three firms all have experience doing of capital market work for Petrobras, having all worked - together with Machado, Meyer, Sendacz e Opice Advogados and Motta, Fernandes Rocha - Advogados on behalf of Petrobras - on the state-owned oil company's historic US$67 billion equity offering, the largest share deal in history, and winner of the corporate finance category in Latin Lawyer's 2010 Deal of the Year awards. For the debt issuance, Petrobras relied on its in-house team for Brazilian advice.

The experience the teams had working together and with Petrobras meant that the deal could be done extraordinarily quickly, in just two weeks, explains Mattos Filho partner Alvaro Notaroberto Barbosa.

"We already had knowledge of the company and that allowed for a much swifter due diligence process," he says. "We did the equity offering and also worked on other deals so we could work together and trust each other."

This quick timing, also helped by the fact that Petrobras already had a shelf registration at the US' Securities and Exchange Commission, allowed the company to tap a particularly favourable moment in the debt markets, explains Barbosa.

Fellow Mattos Filho partner Giovani Loss notes that the proceeds will be used to finance Petrobras' 2010 to 2014 business plan.

"The total investment amount for the 2010 to 2014 business plan is US$224 billion and 62 per cent of this amount will be invested in E&P activities, including the development of the pre-salt discoveries," he says. "2011 is a very important year for the pre-salt, since the definitive production infrastructure for the Tupi field should be installed, after the Tupi pilot production started in October 2010."

Associate Gabriel Sollero Figueira adds that the success of this issuance shows the solidity that Petrobras has in international capital markets.

"It is important to emphasise that the demand for the notes was 2.5 times the final offer, which represents the strong presence of Petrobras within the international market," says Mattos Filho associate Gabriel Sollero Figueira.

The offer, which saw the Petrobras-backed bonds being listed on the New York Stock exchange, was launched on 20 January and was divided into three sets of notes due in 2016, 2021 and 2041.

Counsel to Petrobras and PifCo

•General counsel Nilton Antonio de Almeida Maia, lead manager Igor Muniz, and in-house counsel Marina Caminada Rodrigues Costa and Natalia Tercas Marques

US

•Cleary Gottlieb Steen & Hamilton LLP

Partner Francesca Odell, senior attorney Carla Passos, and associates Dana Stringer, Vivian Lee and Andre Bernini

Cayman Islands

•Walkers

Partner Philip Paschalides and associates Nicole Pineda and Justin Hart

Counsel to the lead managers

Brazil

•Mattos Filho, Veiga Filho, Marrey Jr e Quiroga Advogados

Partners Sergio Spinelli Silva Jr, Alvaro Notaroberto Barbosa, Giovani Loss and Antonio Carlos Guzman, and associate Gabriel Sollero Figueira

US

•Shearman & Sterling LLP

Partners Stuart Fleischmann, Robert Ellison and Don Lonczak, and associates Mathias Von Bernuth, Ana Luísa Aby, Fernanda Iacia and Matthew Tsiaras

(Source: Latin Lawyer)

Petrobras has shown interest in an establishment on Curacao to distribute asphalt products from this island.

28 January 2011