Petrobras Prepares Brazil Bond Offering

Petróleo Brasileiro SA is preparing an offering of debt notes in Brazil's domestic markets that could be sold as early as next week, two sources with direct knowledge of the situation said on Tuesday.

Rio de Janeiro-based Petrobras, as the state-controlled oil producer is known, seeks at least 3 billion reais($983 million) with the transaction, said a first source, who requested anonymity since the plan is in the works. If supplementary and additional allotments are placed, the offering could fetch up to 4 billion reais, the same source added.

Pricing is expected to take place next week, the first source noted. A first, five-year portion could pay about 1.8 percentage point above the benchmark CDI interbank interest rate, both sources said.

A second portion would offer investors seven-year debt under a program governing the sale of so-called infrastructure notes, both sources said, adding that Petrobras could pay around 0.8 percentage point above the yield on government inflation debt of comparable maturity.

A third portion would probably have a maturity between nine and 10 years, yielding 1.7 point above comparable government inflation debt, the sources said.

Banco Bradesco SA (BBDO), Banco do Brasil SA, Grupo BTG Pactual SA and Banco Votorantim SA are managing the transaction, the sources said. Bradesco and Banco do Brasil declined to comment and efforts to get an immediate comment from the other firms were unsuccessful.

The deal comes on top of this month's $3.5 billion loan from China Development Bank Corp, underscoring Petrobras' increasing funding options after a corruption scandal cut the firm's access to funding for months. Petrobras needs money to pay for already-contracted investment outlays this year and refinance some of the $170 billion it owes to banks, suppliers and investors.

Reporting by Guillermo Parra-Bernal