Bloomberg News

Petrobras Yield Gap Widens on Increased Spending Plan: Rio Mover

June 14, 2012

Bonds sold by Petroleo Brasileiro SA (PETR4) fell, sending the yield gap relative to benchmark government debt to the widest since October, after the state-controlled producer increased its spending plan.

The yield on Petrobras debt due 2041 rose four basis points, or 0.04 percentage point, to 5.62 percent at 5:35 p.m. in Sao Paulo, putting it 138 basis points above similar maturity bonds sold by Brazil, according to data compiled by Bloomberg. The spread was the biggest since Oct. 6.

Petrobras will borrow as much as $18 billion a year through 2016 to finance its $236.5 billion investment plan, the biggest in the industry and an increase from the most recent $224.7 billion estimate, the company said today. The company’s outlook assumes average Brent oil prices of $90 a barrel to $100 a barrel through 2016, the company said.

Petrobras also cut its oil and natural gas production target 11 percent to 5.7 million barrels a day in 2020 amid delays in acquiring drilling equipment and production platforms, it said.

Petrobras shares fell 2.8 percent to 18.37 reais. Earlier they fell as much as 3.7 percent to the lowest since May 31.

To contact the reporter on this story: Peter Millard in Rio de Janeiro at pmillard1@bloomberg.net

To contact the editor responsible for this story: Dale Crofts at dcrofts@bloomberg.net


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