Bonds issued by Petrobras, Brazil's state-run oil company, face oversupply risks in the coming years because the company is likely to tap the debt markets for even more cash, according to Credit Suisse. The bank made the statements a day after Petrobras sold $6 billion in bonds at three different maturities.
The debt offering was the largest corporate bond offering ever by Petrobras (PBR), which also sold $70 billion in new shares last year to finance its massive exploration budget. The share sale, which only partially finances the company's exploration budget of $224 billion through 2014, was the world's largest ever.
Credit Suisse expects the company to borrow up to $40 billion in the coming years, with as much as 75% of it being tapped from bondholders, Reuters reported. The bank has an ''underweight'' rating on Petrobras bonds. Following the $6 billion bond sale, Petrobras now has $17.25 billion in outstanding debt denominated in U.S. dollars.
The company is rated A3 by Moodys Investors Service, four levels above speculative grade while Standard & Poor's has a BBB minus on Petrobras -- one level above speculative grade, according to Reuters.