By Antonio Guerrero
The US Export-Import Bank agreed to provide Brazil with some $10 billion in financing to develop the Petrobras state-controlled oil company’s offshore pre-salt oil reserves. Reserves discovered last year will catapult Brazil into becoming one of the world’s 10 largest oil producers. Petrobras already has a $10 billion financing agreement from the China Development Bank. The company’s investment plans call for dedicating nearly $29 billion to the pre-salt development program through 2013, when it expects to extract 1.3 million barrels per day from the new fields. Petrobras will launch a bidding process for pre-salt oil concessions next year.
Eletrobras, Latin America’s largest electrical utility, sold $1 billion of 10-year bonds on the private placement market in July. The deal, which had Credit Suisse as sole bookrunner, carried a 6.875% coupon. The Brazilian government also took advantage of lower borrowing costs and higher demand for Brazilian paper to sell $500 million of dollar-denominated bonds maturing in 2037. The sovereign issue was priced to yield 6.45%, compared with initial talk of 6.6%. The bond is a further reopening of an issue launched in January 2006 at a 7.55% yield and reopened in March 2006 at 6.831% and in January 2007 at 6.635%, bringing the total outstanding to $3 billion. July’s reopening, managed by Deutsche Bank and JP Morgan Chase, reportedly saw $6.5 billion in demand.
Santander Brasil, the local unit of Spain’s Banco Santander, is planning an IPO on the BM&F Bovespa exchange this year to sell a 15% stake in the bank. The offering is expected to raise more than $3 billion, with Bank of America-Merrill Lynch, Credit Suisse, UBS and Santander as underwriters. The Sao Paulo exchange has posted a 49% gain in its benchmark index this year, with investors attracted by Brazil’s improving economic outlook.
General Motors’ Brazilian subsidiary plans to invest $1 billion to expand its production facilities. GM Brazil, which did not participate in the US parent company’s restructuring, will fund the investment program through its own profits as well as local bank loans. The investment plan will also help it launch nine new car models starting in 2012.