Vale, Petrobras mull bond sales within weeks -source

Reuters

By Guillermo Parra-Bernal

NEW YORK, Nov 19 (Reuters) - Vale SA and PetróleoBrasileiro SA, two of Brazil's three largestcompanies, are considering selling bonds in international debtmarkets before the end of this year or in early 2014, a sourcewith direct knowledge of the companies' plans said on Tuesday.

Vale is considering the sale of 10-year, U.S.dollar-denominated global bonds, said the source, who declinedto be identified because the plans are private. The most likelytimetable for a sale could be early January, when a window ofopportunity usually opens for sales of high-grade, emergingmarket debt, the source added.

In the case of Petrobras a potential bond offering couldcome either in dollars, euros or British pounds, the sourceadded. The company is gauging pursuing an offering before theyear ends, if market conditions allow, or pushing it backwardsuntil the next window of opportunity opens in early 2014, thesource said.

The companies could try to raise money for 2014 investmentsand other corporate purposes earlier than usual to mitigatefundraising risk ahead of a presidential election in Brazil andthe U.S. Federal Reserve's expected wind-down of years ofmonetary stimulus. Optimism that Petrobras could soon be allowedby the federal government to increase local gasoline pricescould make the company "attractive again from a bondholderperspective," the source noted.

Representatives of Vale and Petrobras, which are both basedin Rio de Janeiro, did not have an immediate comment onpotential fundraising plans for this or next year.

Efforts to place the bonds come after emerging bond fundsexperienced outflows in 24 of the past 25 weeks, with netredemptions reaching the highest level in almost three months,according to fund research company EPFR.

Petrobras, which in May sold $11 billion of dollar bonds inthe largest-ever bond offering by a Latin American company,could place between $10 billion and $13 billion worth of bondsin international markets during 2014, the source said. Thecompany faces financing needs of nearly $18 billion next year.

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