Brazilian oil company Petrobras has signed a revolving credit facility in the amount of $4.35 billion, with maturity in March 2023.
Petrobras said on Thursday that the credit facility was signed on Wednesday, March 7, with a syndicate of 17 banks.
The syndicate includes well-known names in banking like BNP Paribas, Credit Agricole, Bank of America, Bank of China, JPMorgan Chase, Morgan Stanley, Deutsche Bank, and Standard Chartered.
The company added that, through the instrument, it could make withdrawals from the line until a month before maturity.
According to Petrobras, it is using the product for the first time, and it will cost 0.51% per year for the maintenance of the limit with the banks.
In the case of withdrawals, the cost of the line is fixed at 6M Libor + 1.7% per year, if the rating of the company at the time of drawing is below the investment grade, and 6M Libor + 1.3% per year, if the company has an investment grade rating as of the date of drawing.
Libor, or London Interbank Offered Rate, serves as the first step to calculating interest rates on various loans throughout the world.
“This contract creates yet another cash availability alternative for the company to use according to its needs. As such, Petrobras may use its cash for early repayment of current debts, allowing for the reduction of the carrying cost of debt,” said Petrobras.
Petrobras also said that the transaction was in line with the company’s liability management strategy, which aims to improve the amortization profile and reduce the cost, taking into consideration the deleveraging goals under its 2018-2022 Business and Management Plan.