A familiar face to emerging-market investors, Petrobras priced a US$550 million cross-border bond backed by receivables from the export sales of heavy fuel oil and bunker oil on May 14 (see ASR 5/5 p.1). The yield was 6.480%, while the spread came to 390 basis points over five-year Treasuries, a tinge tight to expectations. Led by Citbank and Banco Bilbao Vizcaya Argentaria, the deal was nearly three times oversubscribed, according to sources. The deal has a 12-year legal-final, six-year average-life, maturity.

The transaction came off the same structure as a three-tranche deal at the end of 2001. The stand-alone ratings from Moody's Investors Service and Fitch Ratings came down a notch from the initial placement, to Baa2' and BBB-', respectively. In its presale report, Moody's mentioned that if the issuance of senior certificates off the SPV topped US$750 million, placements were unlikely to get the issuer's global local-currency rating of Baa1.' Standard & Poor's, meanwhile, gave stand-alone ratings of BBB-' to the current and last deal. The tranches of the initial placement ultimately received a AAA' thanks to sureties provided by XLCA, MBIA and Ambac.

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