Petroleo Brasileiro S.A.

Transcription

Deutsche Bank
Markets Research
Emerging Markets
Brazil
HY Corporate Credit
Energy
Commodities
Energy
Company
Petroleo Brasileiro
S.A.
Date
20 May 2016
Eduardo Vieira
Research Associate
(+1) 212 250-7568
[email protected]
Reiterating Buy (on select bonds) on
positive Brazil/oil momentum
We reiterate our Buy recommendation on PETBRA 7.875 ‘19s, 4.875 and 5.75
‘20s, 5.375 ‘21s, ‘24s, ‘40s and 2115s, assign a Buy recommendation to the
newly-issued 8.375 ‘21s and a Hold recommendation to the 8.75 ‘26s, and
downgrade the 3.0 ‘19s, ‘23s, ‘41s and ‘44s to Hold from Buy and the 3.25 and
3.5 ‘17s to Sell from Hold. Our rationale for the Buy recommendations include:
(1) encouraging 1Q16 results (4.2x DB-adjusted run-rate net leverage despite
weak production, BRL and oil prices); (2) positive momentum on Brazil’s
macro/governance front and on oil prices (likely to remain above USD40/bbl);
and (3) still-wide risk-adjusted spreads relative to Brazil and EM peers. We have
revised our base-case forecasts (with a 2016 Brent price of USD43/bbl vs.
USD40/bbl previously, 2016 USDBRL of 3.7 vs. 3.8 previously and USD14bn of
asset sales through 2018 vs. 2019 previously) and now estimate net leverage
(excluding non-cash EBITDA items) of 4.0x in 2016 (vs. 4.2x previously) and
3.5x in 2020 (vs. 3.7x previously). We also forecast a cumulative funding gap
(post this week’s issuance and excluding further asset sales) through March
2020 of USD39bn (USD45bn previously) and USD2.5bn assuming USD13bn in
additional asset sales, 30% rollover of loan maturities and USD10bn of new
loans from state-owned banks. Our favorite bonds in the PETBRA curve are the
4.875 ‘20s due to their superior risk-adjusted value to Brazil and EM peers.
Solid 1Q16 results encourage us to expect better results ahead on higher oil
prices, normalized production and well-anchored BRL. In our view, Petrobras’
1Q16 results were quite encouraging, as the company managed to grow
EBITDA (adjusted to exclude non-cash items) sequentially by 8% (in USD
terms) in a quarter that was impacted by production stoppages, weak
domestic demand, low oil prices (USD34/bbl Brent) and weak average USDBRL
(3.9). The combination of a stronger BRL (3.56 spot and DB’s 3.7 YE forecast),
higher oil prices (USD48.8/bbl Brent spot and USD48/bbl DB’s 2H16 forecast)
and domestic oil and gas production normalization (to 2.5-2.6 Mboepd) bodes
well for future earnings and for our 4.0x 2016 net leverage forecast.
Stronger BRL/oil and a more market-friendly cabinet in Brazil point to faster
deleveraging prospects for Petrobras, in our view. A string of dovish global
policy developments and Chinese stimuli earlier this year sparked a strong rally
in EM assets and commodities, including the BRL (Petrobras has negative USD
exposure) and oil prices. Moreover, unplanned recent oil supply disruptions in
Nigeria, Canada and Libya have so far negated the impact of incremental oil
production, thus supporting prices. These developments coincided with
increased prospects of a favorable government change in Brazil, further
enhancing the valuation of Brazilian financial assets. The cabinet change
currently taking place in Brazil following VP Michel Temer’s nomination by the
congress as Interim President (potentially becoming the official president if
President Dilma Rousseff’s impeachment is approved by the senate within 180
days) has brought in some names well regarded by the market (including
Henrique Meirelles as finance minister and Ilan Goldfajn as central bank head),
and we believe they have a good shot at reviving confidence in the economy
and improving governance at state-owned companies, including Petrobras. In
our view, this could spark faster cost and capex cuts, faster asset sales and,
along with a well-anchored BRL, faster deleveraging.
Key risks: In our view, the negative risks to Petrobras include negative
exposure to the USD (84% of the debt, ~50% of costs and capex, 35% of
revenue), lower oil prices, political/macro challenges in Brazil, cash burn due to
heavy capex, and a large debt maturity wall (USD73bn through 2020 and
USD101bn through 2024). Positive risks: higher oil prices, and stronger BRL.
________________________________________________________________________________________________________________
Deutsche Bank Securities Inc.
DISCLOSURES AND ANALYST CERTIFICATIONS ARE LOCATED IN APPENDIX 1. MCI (P) 057/04/2016.
20 May 2016
HY Corporate Credit,Energy,Commodities,Energy
Bond recommendation table
Figure 1: Petrobras’ outstanding issues covered by Deutsche Bank
Maturity
Amount O/S
Mdy/S&P/Fitch
DB Rec. / Date of Rec.*
Mid Price
PETBRA 3.250% Notes ‘17
Issue
17-Mar-17
USD 1,600m
B3 / B+ / BB
Sell / 19-May-2016
100.375
Mid Yield Z-spread
2.78
195
Sov Sprd
6-Feb-17
USD 1,750m
B3 / B+ / BB
Sell / 19-May-2016
100.500
2.77
196
-7
1-Mar-18
USD 1,750m
B3 / B+ / BB
Hold / 13-Jan-2015
100.875
5.34
436
169
15-Jan-19
USD 2,000m
B3 / B+ / BB
Hold / 19-May-2016
91.900
6.38
529
232
15-Mar-19
USD 2,750m
B3 / B+ / BB
Buy / 21-Apr-2016
101.000
7.47
637
336
20-Jan-20
USD 2,500m
B3 / B+ / BB
Buy / 21-Apr-2016
92.000
8.33
714
394
17-Mar-20
USD 1,500m
B3 / B+ / BB
Buy / 21-Apr-2016
88.500
8.46
725
403
27-Jan-21
USD 5,250m
B3 / B+ / BB
Buy / 21-Apr-2016
87.000
8.83
754
417
23-May-21
USD 5,000m
B3 / B+ / BB
Buy / 19-May-2016
97.850
8.92
762
420
20-May-23
USD 3,500m
B3 / B+ / BB
Hold / 19-May-2016
76.750
8.92
744
378
17-Mar-24
USD 2,500m
B3 / B+ / BB
Buy / 21-Apr-2016
84.250
9.11
759
385
23-May-26
USD 1,750m
B3 / B+ / BB
Hold / 19-May-2016
94.650
9.59
798
406
20-Jan-40
USD 1,500m
B3 / B+ / BB
Buy / 21-Apr-2016
74.750
9.59
769
314
27-Jan-41
USD 2,250m
B3 / B+ / BB
Hold / 19-May-2016
74.000
9.50
758
301
20-May-43
USD 1,750m
B3 / B+ / BB
Hold / 13-Jan-2016
67.500
8.79
684
220
17-Mar-44
USD 1,000m
B3 / B+ / BB
Hold / 19-May-2016
77.500
9.57
766
300
PETBRA 6.850% Notes 2115
5-Jun-2115
USD 2,500m
B3 / B+ / BB
Buy / 21-Apr-2016
69.000
9.93
802
336
-18
Source: Deutsche Bank. Market data indicative as of 5/19/2016. * Deutsche Bank recommendation / date of last recommendation change. Recommendation changes and new recommendation in bold.
Valuation and bond recommendations
PETBRA’s 4-to-10-year sector offers attractive relative value to Brazil and EM
peers, in our view; our favorite PETBRA bonds are the ‘20s (both maturities),
old ‘21s and ‘24s due to a combination of excessively flat spread to sovereign
in 4- and 5-year sectors, manageable funding gap in the next four years and
superior volatility-adjusted upside; the new ‘21s and ‘26s are less attractive
than similar-maturity issues mainly due to higher prices and insufficient spread
slopes, in our view; the ‘40s and 2115s are our favorite bonds in the long end.
Figure 2: PETBRA valuation stats
Issue
PETBRA 3.250 ‘17
PETBRA 3.500 ‘17
PETBRA 5.875 '18
PETBRA 3.000 '19
PETBRA 7.875 '19
PETBRA 5.750 '20
PETBRA 4.875 '20
PETBRA 5.375 '21
PETBRA 8.375 '21
PETBRA 4.375 '23
PETBRA 6.250 '24
PETBRA 8.750 '26
PETBRA 6.875 '40
PETBRA 6.750 '41
PETBRA 5.625 '43
PETBRA 7.250 '44
PETBRA 6.850 2115
DB
Value
Rank
DB's
Funding
Gap
Forecast
NA
NA
12
13
5
3
1
2
8
11
4
9
6
10
15
14
7
-28.5
-25.1
-18.3
-12.3
-3.3
+2.5
+12.6
+19.0
+32.2
+38.5
+42.9
+51.8
+51.8
+51.8
+51.8
+51.8
+51.8
Price
Size BidUSDbn Ask
1.60
1.75
1.75
2.00
2.75
2.50
1.50
5.25
5.00
3.50
2.50
1.75
1.50
2.25
1.75
1.00
2.50
0.75
0.50
0.75
0.80
1.00
1.00
1.00
1.00
0.30
1.00
0.50
0.30
1.00
1.00
1.00
1.00
1.00
Mid
Price
100.38
100.50
100.88
91.90
101.00
92.00
88.50
87.00
97.85
76.75
84.25
94.65
74.75
74.00
67.50
77.50
69.00
60D
Mid Tenor Mod Px
Yield (Yrs) Dur Volat
2.78
2.77
5.34
6.38
7.47
8.33
8.46
8.83
8.92
8.92
9.11
9.59
9.59
9.50
8.79
9.57
9.93
0.8 0.8 6.3
0.7 0.7 6.1
1.8 1.6 11.0
2.6 2.4 14.9
2.8 2.4 13.1
3.7 3.1 15.7
3.8 3.3 15.7
4.7 3.9 17.7
5.0 4.0 18.1
7.0 5.7 18.4
7.8 5.8 18.8
10.0 6.5 19.7
23.7 9.5 21.9
24.7 9.7 21.9
27.0 11.1 23.1
27.8 9.9 21.0
99.0 9.6 23.5
DB's Upside Estimates
Z Spread (bps)
Par-eq Z Spread (bps)
Spread to Sov (bps)
Vol-Adj
DB
Price Upside
Target Price Upside With
Price Upside + Yield Carry
DB's
Target
1M Spread DB
Last z-score Move Target
Slope
Per
Unit Diff. to
Last of Dur Z Sprd
ParDB
Last equiv Target
100.50
100.75
102.29
94.11
105.26
97.29
93.97
93.07
103.91
81.63
90.55
102.49
81.69
80.72
70.89
83.01
75.48
195
195
436
529
637
714
725
754
762
744
759
798
769
758
684
766
802
186
185
417
513
607
688
704
736
727
749
781
769
844
838
803
829
852
+0.1
+0.2
+1.4
+2.4
+4.2
+5.8
+6.2
+7.0
+6.2
+6.4
+7.5
+8.3
+9.3
+9.1
+5.0
+7.1
+9.4
+2.9
+3.0
+6.7
+8.8
+11.7
+14.1
+14.6
+15.8
+15.1
+15.3
+16.6
+17.9
+18.9
+18.6
+13.8
+16.7
+19.3
0.46
0.50
0.62
0.59
0.89
0.90
0.94
0.89
0.83
0.83
0.88
0.91
0.86
0.85
0.60
0.79
0.82
-2.3
-2.3
-2.2
-1.6
-1.3
-0.2
-0.4
+1.5
+0.0
+2.3
+1.9
+0.0
+2.9
+2.9
+2.2
+2.8
+2.8
-15
-36
-84
-96
-166
-174
-178
-169
-150
-108
-122
-122
-89
-86
-44
-68
-87
179
160
353
432
471
540
548
585
612
636
637
676
679
672
640
698
715
NA
-9
NA
-10
+256 -19
+118 -16
+235 -30
+187 -26
+164 -21
+60 -18
+40 -35
+10
+5
+27 +22
-18 -29
+24 +75
+21 +80
+7 +119
+17 +63
+26 +50
-18
-7
+169
+232
+336
+394
+403
+417
+420
+378
+385
+406
+314
+301
+220
+300
+336
-27
-17
+150
+216
+306
+368
+382
+399
+385
+383
+407
+377
+389
+381
+339
+363
+386
+47
+27
+85
+136
+170
+220
+225
+248
+270
+270
+263
+284
+225
+215
+176
+232
+249
Source: Deutsche Bank. Market data indicative as of 5/19/2016. Vol-Adj Upside With Carry = (DB’s price upside estimate + yield) / 60-day historical price volatility. We used the price volatility of similar maturities for the
new ‘21s and ‘26s. DB’s funding gap forecast in USD billions (see liquidity section).
Page 2
20 May 2016
Nine-factor risk-adjusted valuation rank (DB value rank) puts the ‘20s, old ‘21s
and ‘24s on top and the ‘43s and ‘44s at the bottom; the new ‘21s and ‘26s
rank lower than similar-maturity issues
We have created a risk-adjusted valuation rank (DB value rank) for the PETBRA
bonds that we cover (including the newly-issued 8.375 ‘21s and 8.75 ‘26s and
excluding the 3.25 and 3.5 ‘17s) using nine factors, listed below (including
weights) and in figure 2. The results are shown in figure 3.
DB’s volatility-adjusted target upside with carry (17.5% weight): DB’s price
upside forecast (assuming target spreads for each bond, as seen in figures
4 and 5) plus carry (yield to maturity) in the numerator, 60-day historical
price volatility in the denominator (as shown in figure 2).

DB’s forecast of Petrobras’ cumulative funding gap through the issue’s
maturity date (17.5% weight): assumes USD14bn of asset sales through
2018, 30% rollover of loan maturities; USD10bn of new loans from stateowned banks and USD3bn minimum cash position (see liquidity section);

Figure 3: PETBRA valuation rank
as of May 19, 2016
4.875 ‘20 (Buy)
1
5.375 '21 (Buy)
2
5.750 '20 (Buy)
3
6.250 '24 (Buy)
4
7.875 ’19 (Buy)
5
6.875 '40 (Buy)
6
6.850 2115 (Buy)
7
8.375 ‘21 (new, Buy)
8
8.750 '26 (new, Hold)
9
6.750 '41 (Hold)
10

Modified duration (12.5% weight);
4.375 ’23 (Hold)
11

Price (10.0% weight): DB’s indicative mid market;
5.875 '18 (Hold)
12
3.000 ‘19 (Hold)
13
7.250 '44 (Hold)
14
5.625 '43 (Hold)
15

Yield to maturity (10.0% weight): DB’s indicative mid market;

Par-equivalent-adjusted Z spread slope per incremental unitary modified
duration (10.0% weight): ‘18s vs. ‘17s (average); ‘19s vs. ‘18s; ‘20s vs. ‘19s
(average); ‘21s vs. ‘20s (average); ‘23s vs. ‘21s (average); ‘24s vs. ‘21s
(average); ‘26s vs. ‘24s; long end vs. ‘26s;

Par-equivalent-adjusted spread to sovereign curve (7.5% weight): parequivalent (30% recovery) Z spread differential to fitted sovereign curve;

Bid-ask price spread (7.5% weight);

One-month Z Spread z-score (7.5% weight).
Figure 4: DB’s target Z spreads for PETBRA
900
Source: Deutsche Bank
Figure 5: DB’s target sovereign spreads for PETBRA
+500
800
+400
700
+300
600
500
+200
400
+100
300
+0
200
100
-100
Latest
Par-equiv Adjustment
12-month Low
Source: Deutsche Bank. Market data indicative as of 5/19/2016.
DB Target
1M Avg
Latest
Par-equiv Adjustment
12-month Low
DB Target
1M Avg
Source: Deutsche Bank. Market data indicative as of 5/19/2016.
Page 3
20 May 2016
PETBRA offers attractive ratings-adjusted relative value to EM peers in the 5year and 10-year sectors
Figure 6: Z spread vs average rating – 5YR
Source: Deutsche Bank, Moody’s, S&P, Fitch. Pricing is indicative (mid side), as of May 18, 2016.
Page 4
Figure 7: Sov sprd vs Moody’s standalone rating – 5YR
Source: Deutsche Bank, Moody’s.
Pricing is indicative (mid side), as of May 18, 2016.
20 May 2016
Buy the 7.875 ‘19s, 5.75 and 4.875 ‘20s, 5.375 and 8.375 ‘21s, ‘24s, ‘40s and
2115s; Hold the 5.875 ‘18s, 3.0 ‘19s, ‘23s, ‘26s, ‘41s, ‘43s and ‘44s; Sell the
3.25 and 3.5 ‘17s; accept the tender offer on the 3.25 and 3.5 ‘17s, 5.875 ‘18s
and 3.0 ‘19s (and not on the 7.875 ‘19s).

PETBRA 3.25 and 3.5 ‘17s are fully valued, in our view, with less than 200
bps of Z spread and trading inside Brazil. Moreover, they are likely to be
mostly taken out by the company’s ongoing tender offer (see liquidity
section). We change our recommendation on the 3.25 and 3.5 ‘17s to Sell
from Hold, and advise investors to accept the tender offer on the early
tender date (May 31) at the tender prices of 100.5 and 100.75, respectively.

PETBRA 5.875 ‘18s still offer an outsized 256-bp par-equivalent Z spread
slope per incremental unitary duration to the ‘17s, but at 100.88 mid price
we see only 1.4% of price upside to them (assuming a target spread to
sovereign of 85 bps). Due to limited upside and lower carry (yield of 5.3%),
we reiterate our Hold recommendation on the 5.875 ‘18s. We advise
investors to accept the tender offer on the early tender date (May 31) at
the tender price of 102.25, implying a price upside of 1.4%.

PETBRA 3.0 ‘19s offer little price upside in our view (2.4% at 91.9 mid
price and assuming a target spread to sovereign of 136 bps), despite
relatively-low dollar price. We then change our recommendation on the 3.0
‘19s to Hold from Buy. We advise investors to accept the tender offer on
the early tender date (May 31) at the tender price of 94.125, implying a
price upside of 2.4%.

PETBRA 7.875 ‘19s offer a favorable combination of price upside (4.2% at
101.0 mid price and assuming a target spread to sovereign of 170 bps),
relatively-low duration (2.4), outsized par-equivalent Z spread slope per
incremental unitary duration to the ‘18s (+235 bps), and Petrobras’
USD3.3bn financial liquidity surplus (as per our forecasts), despite a high
dollar price. We reiterate our Buy recommendation on the 7.875 ‘19s. We
advise investors do not tender those bonds, as the tender price of 103.875
offers only 2.8% of price upside.

PETBRA 5.75 and 4.875 ‘20s rank third and first, respectively out of 15
PETBRA bonds screened through the DB value rank methodology due to
their superior combination of outsized volatility-adjusted target upside with
carry (0.90 and 0.94, respectively, vs. 0.77 average for the curve), outsized
par-equivalent Z spread slope per incremental unitary duration to the ‘19s
(+187 bps and +164 bps), moderate duration (3.1 and 3.3), and Petrobras’
manageable funding gap as per our forecasts (USD2.5bn and USD12.6bn).
In other words, we believe the 5.75 and 4.875 ‘20s offer the most
convexity to the marginal refinancing and/or asset sale deal. PETBRA 5.75
and 4.875 ‘20s also offer excessive spreads relative to EM peers, in our
view (as shown in figures 6 and 7). We reiterate our Buy recommendation
on the 5.75 and 4.875 ‘20s, with estimated price upside of 5.8% and 6.2%,
respectively.

PETBRA 5.375 ‘21s rank second out of 15 PETBRA bonds screened
through the DB value rank methodology due to due to outsized volatilityadjusted target upside with carry (0.89), the second highest par-equivalentadjusted spread to sovereign (399 bps), moderation duration (3.9) and
Petrobras’ moderate funding gap (USD19bn). PETBRA 5.375 ‘21s also offer
excessive spreads relative to EM peers, in our view (see figures 6 and 7).
We reiterate our Buy recommendation on the 5.375 ‘21s, with estimated
price upside of 7.0%.

PETBRA 8.375 ‘21s (new) rank eight out of 15 PETBRA bonds screened
through the DB value rank methodology, with key value strengths
including superior spread to sovereign (385 bps vs. 350 bps average for
the curve) and an excessively flat 5-to-10-year spread curve (particularly on
a spread to sovereign basis), partially offset by higher price, duration and
Page 5
20 May 2016
Petrobras’ funding gap than similar-maturity issues. PETBRA 5.375 ‘21s
also offer excessive spreads relative to EM peers, in our view (see figures 6
and 7). We assign a Buy recommendation to the 8.375 ‘21s, with
estimated price upside of 6.2%.

PETBRA ‘23s rank eleventh out of 15 PETBRA bonds screened through the
DB value rank methodology, with key value strengths including relativelylow price (76.75), above-average par-equivalent-adjusted spread to
sovereign (383 bps) and lower volatility than similar-maturity issues.
However, the ‘23s offer quite little duration-adjusted upside relative to the
‘20s and ‘21s. We then change our recommendation on the ‘23s to Hold
from Buy.

PETBRA ‘24s rank fourth out of 15 PETBRA bonds screened through the
DB value rank methodology, with key value strengths including the highest
par-equivalent-adjusted spread to sovereign within the curve (407 bps),
superior volatility-adjusted target upside with carry (0.88) and lower price
compared to the ‘26s, partially offset by higher duration, volatility and
funding gap relative to the 5-year sector. We reiterate our Buy
recommendation on the ‘24s, with estimated price upside of 7.5%.

PETBRA 8.75 ‘26s (new) rank ninth out of 15 PETBRA bonds screened
through the DB value rank methodology, with key value strengths being
superior volatility adjusted target upside with carry (0.91) offset by much
higher prices and higher funding gap than the ‘24s (94.65 vs. 84.25 and
USD52bn vs. USD43bn, respectively). We assign a Hold recommendation
to the 8.75 ‘26s.

PETBRA ‘40s and century bonds (2115s) are our favorite bonds in the long
end of the PETBRA curve, due to superior risk-adjusted upside (see figure
2). We reiterate our Buy recommendation on the ‘40s and 2115s, with
estimated price upside of 9.3% and 9.4%, respectively.

PETBRA ‘40s, ‘41s, ‘43s and ‘44s offer much less risk-adjusted upside than
the 4- to 10-year sector, in our view, due to their high duration and
historical price volatility, as well as below-average spread to sovereign.
Our favorite bonds within the 30-year sector are the ‘40s. We change our
recommendation on the ‘40s, ‘41s and ‘44s to Hold from Buy and reiterate
our Hold recommendation on the ‘43s.
Curve trades and performance monitor

We initiate a 5y7y steepener switch out of PETBRA 4.375 ‘23s and into
PETBRA 5.375 ‘21s. Rationale: 10 bps of negative Z spread slope (13-bp
positive slope on par-equivalent basis) between the 5.375 ‘21s and the
‘23s. Our target slope is +51 bps and target three-month performance is
+1.2%. The trade has a price concession of 10.3 points and a positive
coupon carry of 100 bps (9-bp negative yield carry).

We initiate a 30y100y flattener switch out of PETBRA 5.625 ‘43s and into
PETBRA 6.85 2115s. Rationale: excessive 118-bp Z spread slope (49-bp
par-equivalent-adjusted) between the ‘43s and 2115s and lower duration
of 2115s (9.6 vs. 11.1 for the ‘43s). Our target slope is +49 bps and target
three-month performance is +4.4%. The trade has a price concession of
1.5 points and a positive coupon carry of 123 bps (113-bp positive yield
carry).

We close our 2y4y flattener switch out of PEBRA 4.875 ‘20s and into
PETBRA 5.878 ‘18s, as the ‘18s are better supported following the
announced tender offer, for a total return of -0.7%.
Page 6
20 May 2016
Figure 12: Deutsche Bank’s curve trade ideas and Buy/Sell recommendation on Petrobras bonds
Date
New trades
PETBRA 5y7y Steepener (5.375 '21s vs. 4.375 '23s)
PETBRA 30y100y Flattener ('43s vs. 2115s)
+10.3
+1.5
21-Apr-16
21-Apr-16
21-Apr-16
21-Apr-16
21-Apr-16
21-Apr-16
21-Apr-16
+98.8
+89.8
+86.0
+86.5
+84.8
+76.5
+72.5
Target
+1.0
+1.2
-9
+113
19-Aug-16
19-Aug-16
+7.9
+5.8
+4.9
+5.4
+6.3
+6.9
+6.9
+817
+887
+907
+878
+894
+929
+938
19-May-16 +101.0
19-May-16 +92.0
19-May-16 +88.5
19-May-16 +87.0
19-May-16 +84.3
19-May-16 +74.8
19-May-16 +69.0
Inception
Closed trades
PETBRA 2y4y Flattener (4.875 '20s vs. 5.875 '18s)
PETBRA 3.000 '19s (Long)
PETBRA 5.750 '20s vs. 7.875 '19s
PETBRA 10y30y Flattener (7.250 '44s vs. 6.250 '24s)
Price Yield
Diff. * Diff. **
Date
Inception
19-May-16
19-May-16
Reiterated trades
PETBRA 6.850 2115 (Long)
Price Coupon Yield
Diff. * Diff. * Diff. **
21-Apr-16
21-Apr-16
21-Apr-16
21-Apr-16
21-Apr-16
7-Oct-15
7-Oct-15
7-Oct-15
17-Dec-15
7-Oct-15
7-Oct-15
-11.8
+88.5
+77.3
+76.5
+79.3
+0.1
+93.4
+94.2
-2.5
-9.8
-5.1
Target Performance
+11.4
+4.6
+1.2
+3.1
Reiteration
Inception
+218
+755
+868
+910
+929
+56
+826
+822
+35
+37
+13
19-May-16
19-May-16
19-May-16
19-May-16
19-May-16
21-Apr-16
29-Feb-16
29-Feb-16
29-Feb-16
17-Dec-15
17-Dec-15
Average Realized Performance
-12.4
+91.9
+76.8
+74.0
+77.5
+3.8
+96.5
+97.5
-3.0
-10.4
-4.0
+1.4
+3.4
Performance
+747
+833
+846
+883
+911
+959
+993
Closing
-1.0
+3.0
+4.4
+6.8
+7.3
-3.3
+3.3
+3.5
-2.9
-2.1
+1.0
Price Tot Ret Yield
Chg * Chg * Chg **
+2.3
+2.3
+2.5
+0.5
-0.5
-1.8
-3.5
+2.9
+2.7
+2.9
+0.9
-0.0
-1.2
-3.0
-70
-54
-61
+5
+17
+30
+55
Performance
+312
+638
+892
+950
+957
-139
+628
+575
-55
+52
-61
-0.6
+3.4
-0.5
-2.5
-1.8
+3.7
+3.1
+3.3
-0.5
-0.6
+1.1
-0.7
+3.6
-0.2
-2.0
-1.2
+1.9
+4.4
+4.7
-1.1
-1.0
+1.3
+94
-117
+24
+40
+28
-195
-198
-247
-90
+15
-74
+0.5
+0.8
-44
Source: Deutsche Bank. * In percentage points of face value. ** In base points.
Improved near-term liquidity after USD6.75bn issuance
USD6.75bn bond issuance further enhances Petrobras’ near-term liquidity
On May 17, Petrobras announced and priced USD5.0bn of new 8.375% fiveyear USD notes (‘21Ns) and USD1.75bn of new 8.75% ten-year USD notes
(‘26s) to fund a tender of 2017-2019 bond maturities and for general corporate
purposes. The tenders are an “Any and All” offer for the 8.375% ‘18s and a
“Waterfall” offer for various USD and EUR notes due from 2017 to 2019 for up
to USD6.0bn. The early tender date is May 31, 2016, with the offers to
purchase and consent solicitation set to expire on June 14, 2016. The “Any
and All” offer is conditioned upon the receipt of at least a majority of the
outstanding principal amount of the 2018 notes (principal of USD576.8mn). If
Petrobras does not receive the majority consents, it will not purchase any of
the 8.375% 2018 notes, and their indenture and notes guaranty will not be
amended (Petrobras is seeking to eliminate certain covenants and other
provisions of the 8.375% 2018 notes). The “Waterfall” tender offers are for ten
international notes (seven USD bonds and three EUR bonds) amounting to
USD17.3bn in principal and ranking in different acceptance priority levels
based on their maturities (i.e., 2017 notes rank highest in priority and 2019 the
lowest). Our revised forecasts (see revised forecasts section) indicate a
Page 7
20 May 2016
cumulative gross funding gap of USD39bn, USD58bn and 89bn through March
2020, May 2021 and May 2026, respectively, including USD1.9bn of loans
issued in 1Q16, USD1.4bn of asset sales in 2016 to date and a USD10bn
committed credit line from China. If we assume USD12.6bn of additional asset
sales, 30% rollover of loan maturities and USD10bn of new loans from
Brazilian state-owned banks, the cumulative funding gap would drop to
USD2.5bn, USD19bn and USD43bn through March 2020, May 2021 and May
2026, respectively.
Figure 13: Petrobras: liquidity forecasts by DB Credit Research
Through
In USD billions
Mar '17 Mar '18 Jan '19 Apr '19 Jan '20 Mar '20 Jan '21 May '21 May '23 Mar '24 May '26
Sources of Cash *
Cash & Equiv. (2015E)
New Loans Approved
New Bonds
Asset Sales Completed
Operating Cash Flow
65.2
25.4
11.9
6.8
1.4
19.8
81.9
25.4
11.9
6.8
1.4
36.5
96.5
25.4
11.9
6.8
1.4
51.1
101.1
25.4
11.9
6.8
1.4
55.7
114.8
25.4
11.9
6.8
1.4
69.4
117.9
25.4
11.9
6.8
1.4
72.5
133.3
25.4
11.9
6.8
1.4
87.9
139.3
25.4
11.9
6.8
1.4
93.9
174.5
25.4
11.9
6.8
1.4
129.1
188.8
25.4
11.9
6.8
1.4
143.4
224.4
25.4
11.9
6.8
1.4
179.0
Uses of Cash *
Bond Maturities
Bond Tenders
Loan Maturities
Capex
Minimum Cash Position
54.5
10.7
3.4
13.9
23.5
3.0
81.5
15.5
1.0
20.4
41.5
3.0
109.8
19.6
0.7
30.0
56.5
3.0
121.5
23.8
33.6
61.0
3.0
147.2
26.3
43.3
74.5
3.0
157.2
29.6
47.1
77.5
3.0
184.4
35.7
53.3
92.5
3.0
197.6
40.7
55.6
98.3
3.0
250.4
44.8
69.9
132.7
3.0
272.3
48.1
74.7
146.5
3.0
313.3
50.8
78.3
181.3
3.0
Sources Less Uses I *
10.7
0.4
(13.3)
(20.4)
(32.3)
(39.3)
(51.2)
(58.3)
(75.8)
(83.5)
(89.0)
3.6
10.0
4.2
8.6
10.0
6.1
12.6
10.0
9.0
12.6
10.0
10.1
12.6
10.0
13.0
12.6
10.0
14.1
12.6
10.0
16.0
12.6
10.0
16.7
12.6
10.0
21.0
12.6
10.0
22.4
12.6
10.0
23.5
Source Less Uses II *
28.5
25.1
18.3
12.3
3.3
(2.5)
(12.6)
(19.0)
(32.2)
(38.5)
(42.9)
Incremental OCF **
Incremental Capex **
Incremental FCF **
19.8
23.5
(3.7)
16.6
18.0
(1.4)
14.7
15.0
(0.3)
4.6
4.5
0.1
13.7
13.5
0.2
3.1
3.0
0.1
15.4
15.0
0.4
6.0
5.9
0.2
35.2
34.3
0.9
14.2
13.8
0.4
35.6
34.8
0.8
4.0
3.7
3.5
3.5
3.5
3.5
3.5
3.5
3.4
3.4
3.4
Additional Asset Sales
Backstop from SOE Banks
Rollover of 30% of Loans
Net Debt to EBITDA ***
* Cumulative. ** Non-cumulative. *** EBITDA excludes non-cash items.
OCF = Operating Cash Flow (After Interest).
FCF = Free Cash Flow (Before Asset Sales).
Encouraging 1Q16 results
Solid 1Q16 results encourage us to expect better results ahead on higher oil
prices, normalized production and well-anchored BRL
In our view, Petrobras’ 1Q16 results were quite encouraging, as the company
managed to grow EBITDA (adjusted to exclude non-cash items) sequentially by
8% (in USD terms) in a quarter that was impacted by production stoppages,
weak domestic demand, low oil prices (USD34/bbl Brent) and weak average
USDBRL (3.9). The combination of a stronger BRL (3.5 spot and DB’s 3.7 YE
forecast), higher oil prices (USD49/bbl Brent spot and USD48/bbl DB’s 2H16
forecast) and domestic production normalization (to 2.5-2.6 Mboepd) bodes
well for future earnings and for our 4.0x 2016 net leverage forecast.
1Q16 EBITDA (DB-adjusted) increased by 8% qoq, to USD6.1bn, despite lower
E&P production and lower oil prices
Petrobras’ 1Q16 earnings were better than we expected, primarily due to the
following factors: (i) lower-than-expected (lte) E&P realization price discount to
Page 8
20 May 2016
Brent (USD8.3/boe vs. USD16.8/boe average of previous four quarters); (ii) lte
royalties and special participation (USD2.9/boe vs. USD4.7/boe in 4Q15); (iii) lte
import costs; (iv) lte operational expenses ex- dry-well write-offs (-45% qoq to
USD2.2bn); and (v) higher-than-expected (hte) EBITDA from domestic power
and international business (USD0.52bn vs. USD0.47bn average of previous
four quarters). As a result, EBITDA adjusted to exclude non-cash items (DBadjusted EBITDA) increased by 7.9% qoq to USD6.1bn, despite lower oil prices
(Brent -22% qoq, to USD33.9/bbl), lower domestic oil and gas production due
to maintenance stoppages (-5.8% qoq, to 2.44 Mboepd), and lower domestic
sales volume (-5.3% qoq, to 2.06 Mboepd). The combination of flat domestic
fuel prices (in BRL terms), flat average FX rate and lower refining input prices
led to a 25% qoq increase in the domestic downstream EBITDA (USD4.2bn),
which was a key factor to the company’s solid results.
Figure 14: Petrobras: key financial and operational stats
1Q15
4Q15
1Q16
qoq
yoy
Brent Oil Price
USDBRL, avg
USDBRL, eop
USD/bbl
53.9
2.9
3.2
43.7
3.9
4.0
33.9
3.9
3.6
-22%
+1%
-10%
-37%
+36%
+12%
Domestic Crude Oil Production
Domestic Oil & Gas Production
Mboepd
Mboepd
2.15
2.62
2.12
2.59
1.98
2.44
-6%
-6%
-8%
-7%
Net Exports (Imports) of Crude Oil
Net Exports (Imports) of Oil Products
kboepd
kboepd
4
(229)
172
(3)
108
(139)
-37%
NMF
NMF
-39%
Domestic Oil & Gas Price Difference to Brent
Domestic E&P Realization Price
Domestic Royalties
Domestic Lifting Cost
Domestic E&P Unitary EBITDA
USD/boe
USD/boe
USD/boe
USD/boe
USD/boe
(16.4)
37.5
6.8
13.3
14.8
(14.8)
28.9
4.7
10.6
13.3
(8.3)
25.6
2.9
10.5
10.2
-44%
-11%
-37%
-1%
-23%
-50%
-32%
-57%
-21%
-31%
Domestic Oil Products Sales Volume
Domestic Diesel and Gasoline Volume
Domestic Oil Products Real. Price
Other Downstream Costs
Domestic Refining & Marketing EBITDA
Mboepd
Mboepd
USD/boe
USD bn
USD/boe
2.23
1.48
77.1
5.2
25.0
2.17
1.47
62.2
3.8
16.1
2.06
1.36
59.4
2.0
21.1
-5%
-7%
-4%
-47%
+31%
-8%
-8%
-23%
-61%
-16%
Domestic E&P, Refining & Marketing EBITDA
USD bn
Domestic E&P, Refining & Marketing Unitary EBITDA USD/boe
9.18
38.3
6.58
26.7
6.55
28.6
-0%
+7%
-29%
-25%
-45%
+22%
+8%
-28%
+8%
-27%
+25%
+433%
-349%
+8%
-28%
-40%
-21%
-13%
-27%
-30%
Operational Expenses
Reported Adjusted EBITDA
Non-cash EBITDA Items (DB adjustment)
DB-adjusted EBITDA
E&P
Refining & Marketing
Other Domestic Businesses
International
Overhead
USD bn
USD bn
USD bn
USD bn
USD bn
USD bn
USD bn
USD bn
USD bn
(2.02)
7.50
0.94
8.43
3.82
5.36
0.36
0.29
(1.40)
(4.00)
4.43
1.22
5.65
3.18
3.40
0.06
(0.08)
(0.90)
(2.18)
5.41
0.69
6.10
2.31
4.24
0.31
0.21
(0.97)
Cash Flow From Operations Before WC Changes
Working Capital Variation
Capex
Asset Sales
Free Cash Flow (FCF)
Recurring FCF @ USD19bn Annual Capex
USD bn
USD bn
USD bn
USD bn
USD bn
USD bn
5.89
(2.11)
(6.16)
0.18
(2.21)
1.14
5.96
(0.80)
(4.67)
0.51
0.99
1.21
4.17
(1.68)
(3.83)
0.00
(1.34)
(0.58)
-30%
-29%
-18%
-38%
Cash & Equivalent
Short-term Debt
Total Debt
Net Debt
USD bn
USD bn
USD bn
USD bn
21.3
12.4
125.2
103.9
25.4
14.5
124.1
98.7
22.4
17.3
125.4
102.9
-12%
+5%
+1%
+4%
+0%
-1%
32.6%
3.71
3.08
1.72
+3.6%
25.6%
5.49
4.37
1.76
+3.9%
33.8%
5.14
4.22
1.30
-1.9%
EBITDA Margin
Total Debt / DB-Adjusted LQA EBITDA
Net Debt / DB-Adjusted LQA EBITDA
Cash & Equivalent / Short-term Debt
Recurring FCF @ USD18bn Capex / Total Debt
+824 bps +125 bps
-0.35
+1.43
-0.15
+1.14
-0.46
-0.42
Source: Deutsche Bank, Company Reports.
Page 9
20 May 2016
Run-rate net leverage of 4.2x (vs. 4.4x LQ) due to higher EBITDA, stronger BRL
and limited cash burn
Petrobras’ run-rate (LQA) debt-to-EBITDA (DB-adjusted) metrics improved in
the quarter to 5.1x using gross debt and 4.2x using net debt (vs. 5.5x and 4.4x,
respectively, in 4Q15). While EBITDA increased by 8% qoq, net debt increased
by 4% qoq, to USD103bn, as a stronger BRL (USDBRL -10% qoq, to 3.59, and
16% of Petrobras’ debt in BRL) partially offset the company’s USD1.3bn cash
burn (free cash flow) in the quarter. The cash burn included USD1.7bn of
negative working capital variation and USD3.8bn of capex. If we were to
exclude the change in working capital and use an annualized capex of
USD19bn (guidance for 2016), the company would have burned USD0.6bn
(USD2.3bn annualized, 1.9% of total debt).
Positive macro/governance momentum in Brazil
New interim government’s economic team could revive confidence and
improve governance at state-owned companies, a boon to asset sales and
refinancing prospects
The cabinet change currently taking place in Brazil following VP Michel
Temer’s nomination by congress as Interim President (potentially becoming
the official president if President Dilma Rousseff’s impeachment is approved
by the senate within 180 days, from mid-April) has brought in some names
well regarded by the market (including Henrique Meirelles as finance minister
and Ilan Goldfajn as central bank head), and we believe they have a good shot
at reviving confidence in the economy and improving governance at stateowned companies, including Petrobras. In our view, this could spark faster
cost and capex cuts, faster asset sales and, along with a well-anchored BRL,
faster deleveraging. In fact, press reports indicate that Petrobras might be
close to announce the sale of one of its gas pipeline company for around
BRL18bn (USD5.0bn).
Pedro Parente, the new CEO of Petrobras, brings high-caliber public- and
private-sector experience
BM&FBovespa’s current chairman and former CEO of Bunge’s Brazil unit
Pedro Parente has accepted an invitation from Brazil’s interim president Michel
Temer to replace Aldemir Bendine as CEO of Petrobras, as reported by the
interim president’s press office. Parente was also CEO of Brazilian media
company RBS and energy minister under former president Fernando Henrique
Cardoso, where he oversaw a drought-related energy crisis in 2002. Although
Mr. Parente has apparently no experience in the oil sector, we welcome his
appointment due to his experience in important jobs in both the private and
public sectors.
Positive momentum in oil
Oil is receiving short-term price support from unplanned supply disruptions
(Nigeria, Canada, Libya); fundamentals point to supply-demand rebalancing
starting in 2H16
Deutsche Bank’s Commodities team forecasts a Brent oil price of USD45/bblUSD50/bbl in 2H16, with a long-term price of USD70/bbl. Underpinning this
view is the belief that the process of rebalancing crude oil supply-demand is
underway, as two consecutive years of capex cutbacks eventually must cause
production rates to suffer, while unplanned supply disruptions have so far
negated the impact of incremental oil production.
Page 10
20 May 2016
Key credit anchors
Strong implicit government support (if needed)
In our view, the ultimate anchor for Petrobras as a credit is our belief that any
Brazilian government would have a high incentive to support the company’s
funding requirements (if needed) and thus avoid a credit event that would be
very disruptive for the Brazilian financial system and for Brazilian corporates’
ability to tap funding (domestically and abroad). We believe that government
support, if needed, would happen on an as-needed basis, most likely through
Treasury guarantees to new loans (without immediate cash impact and not
requiring approval from congress), similar to what has happened at other SOEs
in the country. Debt-to-equity conversion of credits held by state-owned banks
(up to ~USD25-30bn) is also a possibility, in our view, implying deleveraging of
up to 1.1x-1.4x EBITDA. Moreover, we estimate that the main state-owned
banks in Brazil (with a loan book of about USD400bn) would have the ability to
extend at least USD10bn of additional loans (on top of rollovers) to Petrobras
without threatening their capitalizations and without crowding out the Brazilian
corporate sector.
Stressed scenario points to 3% of GDP in potential support needs through
2020, which would be feasible through debt-to-equity conversion of credits
held by state-owned banks and Treasury guarantees to new loans, in our view
Petrobras has USD125bn of debt (of which USD53bn are bonds. The key driver
for Petrobras’ leverage (and ability to refinance) is the USDBRL rate, as about
65% of the company’s revenue is linked to the BRL (domestic fuel prices
frozen in BRL terms), while 86% of the debt and about 50% of costs and capex
are linked to the USD. Only in a scenario of very weak USDBRL (above 4.3x)
and oil prices (below USD35/bbl) Petrobras would be at risk of needing
substantial government support, which we believe they would get most likely
through a combination of debt-to-equity conversion of credits held by stateowned banks and Treasury guarantees to new loans. In a stressed scenario of
USD30/bbl Brent price and 4.4 USDBRL, we estimate that Petrobras’ gross
funding gap (before debt rollovers and asset sales) would be USD54bn through
the end of 2020. We estimate that at least USD8bn of that number is owed to
state-owned banks, which would most likely continue to roll over, leaving the
company on the hook for about USD46bn in funding needs, which account to
about 3% of Brazil’s USD1.5tn GDP.
Sizable hydrocarbon reserves in Brazil
Petrobras holds sizable pre-salt hydrocarbon prospects, whose break-even
prices might be in the mid-to-high-30s (USD/boe), according the company.
Wood Mackenzie valued these reserves at USD167bn (NPV10) when oil prices
were at USD100/bbl (see figure 17). Several global oil companies are present in
the Brazilian E&P sector and many of those are industry partners of Petrobras
(through projects in E&P concessions). Sales of stakes in E&P projects and/or
farm-outs are a real possibility for Petrobras, in our view. Potential further
improvement in oil prices and a more market-friendly government in Brazil
could be the sparks for major deals in this area.
Page 11
20 May 2016
Revised forecasts
Revised forecasts: base-case net leverage of 4.0x in 2016, dropping gradually
to 3.5x in 2020; EBITDA is 9x more sensitive to the BRL than to the oil price
We have revised our forecasts following the recent strength in the BRL and oil
prices and the company’s better-than-expected 1Q16 results. Our base-case
forecasts now indicate net leverage (net debt to EBITDA excluding non-cash
items) of 4.0x in 2016, gradually declining to 3.5x in 2020. We also forecast the
cash burn (before asset sales) declining from USD3.3bn in 2016 to positive free
cash flow of USD0.5bn in 2020, and a gross funding gap of USD28bn through
2020. We estimate that for each USD5/bbl increase in the Brent price,
Petrobras’ 2016 EBITDA increases by 0.7% and that for each 10% decline in
the USDBRL rate, Petrobras’ 2016 EBITDA (in USD terms) increases by 10%
and leverage increases by 11%, due to the fact that domestic fuel revenue is
effectively BRL-denominated, thus exposing the company to a large FX
mismatch, with 84%, 55% and 35% of its debt, costs and revenue linked to the
USD. The tables below have key sensitivities to the USDBRL and Brent price,
with key assumptions including flat domestic fuel prices (in BRL terms), flat
domestic E&P production (relative to 2015), 50% of the recently-announced
BRL33bn five-year cost savings efforts, USD14bn in asset sales through 2018.
Figure 15: Petrobras: sensitivity to USDBRL and Brent oil price
2016 Net Debt to EBITDA Forecast
2016-20 Cum. Funding Gap Bef. Asset Sales
3.4
3.6
3.8
4.0
4.2
4.4
3.7
4.0
4.2
4.4
4.6
4.9
3.7
3.9
4.1
4.4
4.6
4.8
3.7
3.9
4.1
4.3
4.6
4.8
3.6
3.9
4.1
4.3
4.5
4.7
3.6
3.8
4.0
4.3
4.5
4.7
3.6
3.8
4.0
4.2
4.4
4.6
2020 Net Debt to EBITDA Forecast
30
2016 USDBRL
2016 USDBRL
2016 Brent Price (USD/bbl)
30
35
40
45
50
55
3.0
3.3
3.6
3.9
4.2
4.2
3.0
3.3
3.6
3.9
4.2
4.2
3.0
3.3
3.6
3.9
4.2
4.2
3.0
3.3
3.6
3.9
4.2
4.2
2.9
3.2
3.5
3.8
4.1
4.1
30
2016 USDBRL
2016 USDBRL
3.0
3.3
3.6
3.9
4.2
4.2
36
40
44
47
51
54
36
40
44
47
50
53
35
40
44
47
50
53
35
40
43
47
50
53
35
39
43
46
50
52
34
39
42
46
49
52
2016-20 Cum. FCF Bef. Asset Sales
30
35
40
45
50
55
3.4
3.6
3.8
4.0
4.2
4.2
3.4
3.6
3.8
4.0
4.2
4.4
35
40
45
50
55
3.4 0
3.6 -4
3.8 -7
4.0 -10
4.2 -12
4.2 -12
35
40
45
50
55
0
-3
-7
-9
-12
-12
0
-3
-6
-9
-12
-12
1
-3
-6
-9
-12
-12
1
-3
-6
-9
-11
-11
2
-2
-5
-8
-11
-11
The Funding Gap and Free Cash Flow (FCF) forecasts are cumulative, before asset sales, from end-2015, in USD billions. EBITDA excludes non-cash items.
Key assumptions (base case):
# International assets fully divested;
# Domestic E&P production flat at 2015 level;
# Domestic demand for oil products: -7.9% in 2016, +2.0% p.a. thereafter;
# Brent price: +USD5.0/bbl in 2017, +USD2.5/bbl per year thereafter up to USD65/bbl;
# USDBRL devaluation (average-of-period): 3% p.a. from 2017 onwards;
# Cost inflation in Brazil: 8% in 2016, declining gradually to 3% in 2020;
# Domestic gasoline and diesel prices: flat in BRL terms;
# 50% of plan to save BRL33bn in costs by 2020;
# Capex: USD19bn in 2016, USD18bn from 2017 to 2020;
# Asset sales: USD5bn in 2016 (including international assets), USD9bn from 2017 to 2018;
# No dividend payments;
# New debt breakdown: 75% in USD, 25% in BRL;
# Marginal interest rate: 8% p.a. for USD debt; 14% p.a. for BRL debt;
# Minimum cash position: USD3bn.
Source: Deutsche Bank Credit Research
Page 12
20 May 2016
Figure 16: Petrobras: base-case forecasts by Deutsche Bank Credit Research
2014
2015
2016E
2017E
2018E
2019E
2020E
Net Revenue
COGS (without D&A)
Operating Expenses (without D&A)
Reported EBITDA
(-) Non-cash Items
EBITDA (Adjusted by DB Credit Research)
Interest Expense
Interest Income
Cash Taxes
Other FFO Items
FFO (Funds From Operations)
Changes in WC
OCF
Capex
Asset Sales
Dividends and other FCF Items
Free Cash Flow
Debt Amortizations
New Debt
Impact of FX on Cash Position
Net Change in Cash & Equivalent
FCF Before Asset Sales and Dividends
USDmn
USDmn
USDmn
USDmn
USDmn
USDmn
USDmn
USDmn
USDmn
USDmn
USDmn
USDmn
USDmn
USDmn
USDmn
USDmn
USDmn
USDmn
USDmn
USDmn
USDmn
USDmn
143,210
(96,028)
(22,070)
25,113
8,161
33,273
(7,045)
1,085
(1,902)
2,367
27,778
(7,340)
20,438
(34,732)
3,991
282
(14,012)
(10,033)
30,943
1,544
9,634
(18,285)
97,283
(57,129)
(17,404)
22,750
4,365
27,115
(6,436)
1,412
(1,924)
1,631
21,799
(2,194)
19,605
(21,494)
726
(1,163)
(14,810)
17,430
(1,867)
(410)
(1,888)
74,240
(37,376)
(12,582)
24,283
24,283
(6,741)
545
(1,314)
16,773
(1,035)
15,739
(19,001)
5,000
1,738
(18,057)
17,750
927
3,285
(3,262)
76,986
(39,410)
(12,357)
25,218
25,218
(7,513)
557
(1,403)
16,860
(497)
16,363
(18,000)
5,000
3,363
(9,287)
(418)
(6,760)
(1,637)
78,545
(40,531)
(12,592)
25,422
25,422
(6,266)
426
(1,687)
17,895
(385)
17,510
(18,000)
4,000
3,510
(14,435)
(319)
(11,564)
(490)
79,944
(41,621)
(12,748)
25,576
25,576
(5,214)
201
(1,908)
18,655
(373)
18,282
(18,000)
282
(21,045)
13,693
(151)
(7,373)
282
81,170
(42,690)
(12,820)
25,660
25,660
(4,892)
58
(2,002)
18,823
(360)
18,463
(18,000)
463
(14,281)
13,905
(44)
463
Cumulative Funding Gap
USDmn
-
-
-
-
-
13,693
27,598
Cash & Equivalent
Total Debt
Net Debt
USDmn
USDmn
USDmn
Total Debt / EBITDA
Net Debt / EBITDA
EBITDA / Interest Expense
EBITDA Margin
25,822
131,474
105,651
25,412
124,143
98,731
28,697
125,312
96,614
21,937
115,387
93,450
10,373
100,380
90,008
3,000
92,514
89,514
3,000
91,593
88,593
4.0
3.2
4.7
23%
4.6
3.6
4.2
28%
5.2
4.0
3.6
33%
4.6
3.7
3.4
33%
3.9
3.5
4.1
32%
3.6
3.5
4.9
32%
3.6
3.5
5.2
32%
-32.1%
-18.5%
-6.6%
-23.7%
-10.4%
-2.1%
3.7%
3.9%
-3.3%
2.0%
0.8%
-3.7%
1.8%
0.6%
-0.5%
1.5%
0.3%
-1.0%
Net Revenue Growth
EBITDA Growth
Net Debt Growth
EBITDA - Domestic Oil and Gas
EBITDA - Domestic Downstream
EBITDA - Overhead and Other Businesses
USDmn
USDmn
USDmn
33,036
3,877
(3,639)
15,129
13,493
(1,506)
12,147
15,183
(3,048)
14,850
13,488
(3,120)
16,263
12,332
(3,174)
17,706
11,065
(3,196)
19,176
9,668
(3,184)
Revenue Linked to International Oil Prices
Costs Linked to International Oil Prices
EBITDA Linked to International Oil Prices
USDmn
USDmn
USDmn
54,957
(66,134)
(11,177)
30,458
(30,204)
254
17,429
(14,172)
3,258
19,479
(16,843)
2,636
20,593
(18,685)
1,908
21,728
(20,636)
1,093
22,886
(22,698)
188
Revenue Linked to the USD
Costs Linked to the USD
EBITDA Linked to the USD
USDmn
USDmn
USDmn
54,957
(56,847)
(1,891)
30,458
(32,551)
(2,093)
17,429
(16,675)
755
19,479
(19,225)
255
20,593
(20,955)
(362)
21,728
(22,803)
(1,075)
22,886
(24,771)
(1,885)
38%
52%
60%
31%
46%
43%
23%
33%
28%
25%
37%
33%
26%
39%
35%
27%
42%
38%
28%
45%
41%
% of Net Revenue Linked to USD and Intern. Oil Prices
% of Cash Costs and Expenses Linked to USD
% of Cash Costs and Expenses Linked to Intern. Oil Prices
Domestic E&P Production
Domestic Oil & NGL Production
Domestic Oil & NGL Production growth, yoy
kboepd
kboepd
2,460
2,034
5.3%
2,597
2,128
4.6%
2,597
2,128
0.0%
2,597
2,128
0.0%
2,597
2,128
0.0%
2,597
2,128
0.0%
2,597
2,128
0.0%
Domestic Refining Production
Domestic Refining Production growth, yoy
kboepd
2,170
2.2%
2,026
-6.7%
2,026
0.0%
2,026
0.0%
2,026
0.0%
2,026
0.0%
2,026
0.0%
Sales Volume in Brazil
Sales Volume in Brazil Growth, yoy
kboepd
3,003
4.2%
2,789
-7.1%
2,568
-7.9%
2,619
2.0%
2,672
2.0%
2,725
2.0%
2,780
2.0%
Domestic Net Exports - Crude Oil and Products
Domestic Net Exports - Natural Gas and LNG
kboepd
kboepd
(412)
(349)
(24)
(304)
377
(305)
65
(305)
24
(305)
(18)
(305)
(61)
(305)
Domestic Gasoline Refinery Price Change in BRL, yoy
Gasoline Refinery Price (Brazil vs. US)
3.8%
-9%
7.2%
30%
1.5%
45%
0.0%
27%
0.0%
17%
0.0%
8%
0.0%
0%
Domestic Diesel Refinery Price Change in BRL, yoy
Diesel Refinery Price (Brazil vs. US)
5.0%
-7%
10.4%
38%
1.0%
53%
0.0%
33%
0.0%
22%
0.0%
13%
0.0%
5%
98.9
2.67
2.36
6.3%
52.4
3.97
3.33
9.0%
43.0
3.70
3.70
8.0%
48.0
3.81
3.81
6.0%
50.5
3.93
3.93
5.0%
53.0
4.04
4.04
4.0%
55.5
4.16
4.16
3.0%
Brent Reference Price
BRL/USD (eop)
BRL/USD (avg)
Cost Inflation
USD/boe
Page 13
20 May 2016
Figure 17: Petrobras’ recoverable oil reserves as estimated by Wood
Mackenzie with long-term oil price (real) of USD100/bbl
Asset
Basin
Equity
(%)
Brazilian assets
Key pre-salt offshore assets
Buzios
Lula
Buzios (Surplus)
Iara
Sapinhoa
Jubarte
Cernambi
Libra
Iara Entorno
Iara Entorno (Surplus)
Florim
Baleia Azul
NPV10
(USDm)
IRR (%)
317,264
USD/
boe
Recoverable reserves
(mnboe)
Oil
Oil & Gas
9.2
32,035
34,381
Santos
Santos
Santos
Santos
Santos
Campos
Santos
Santos
Santos
Santos
Santos
Campos
100%
65%
100%
65%
45%
100%
65%
40%
100%
100%
100%
100%
166,770
41,509
34,294
16,057
15,074
10,887
9,828
9,788
7,479
6,643
6,206
4,743
4,262
33.8
32.6
22.8
24.5
28.3
36.6
57.0
52.2
17.0
31.1
19.6
33.3
141.4
6.7
13.6
6.4
2.9
6
11.5
21.9
10.1
3.2
11.4
2.6
10.2
27.6
23,441
2,931
5,052
5,269
2,381
863
445
885
2,226
547
2,244
443
155
24,729
3,051
5,396
5,480
2,516
950
449
970
2,323
583
2,391
465
155
Key post-salt offshore assets
Marlim Sul
Campos
Marlim
Campos
Marlim Leste Area
Campos
Papa-Terra
Campos
Barracuda Area
Campos
Cachalote
Campos
Caratinga Area
Campos
Baleia Franca
Campos
100%
100%
100%
63%
100%
100%
100%
100%
53,861
16,683
10,439
5,652
5,112
4,613
4,491
3,751
3,120
61.3
38.1
31.8
32.6
17.7
28.7
215.1
25.1
277.7
21.8
17.9
26.2
23.5
21.5
26.5
21.6
26.7
22.5
2,416
897
399
227
237
169
208
140
139
2,472
934
399
240
237
174
208
141
139
Key onshore assets
Ceara Potiguar
Reconcavo Tucano
Sergipe Alagoas
Espiritu Santo
100%
100%
100%
100%
11,642
5,342
2,548
2,333
1,419
7.4
19.1
211.1
18.8
19.1
19.4
14.9
27.5
500
253
100
101
46
618
279
131
156
52
Other assets in Brazil
Others - Campos Basin
Others - Santos Basin
Urucu Area
Manati
Camarupim
Peroa
Canapu
Piranema
Others
NA
NA
100%
35%
76%
100%
100%
100%
NA
84,991
58,026
22,419
2,787
640
393
259
212
143
112
NA
NA
124.1
40.4
4.3
28.5
13.7
8
NA
13.0
16.5
9.3
7.9
18.3
14.4
26.3
20.1
20.1
0.6
5,678
3,272
2,025
190
1
5
1
1
7
176
6,562
3,516
2,417
352
35
27
10
11
7
187
11,794
1,208
1,713
96
6,762
2,015
8.2
6.5
3.6
5.5
10.5
15.7
878
83
68
17
582
128
1,446
187
472
17
642
128
329,058
9.2
32,913
35,825
International assets
Argentina
Bolivia
Venezuela
UF Gulf of Mexico
Nigeria
Total Petrobras
Source: Deutsche Bank, Wood Mackenzie.
Page 14
20 May 2016
Figure 18: Z spread vs. Brent Price
Source: Deutsche Bank. Pricing is indicative (mid side), as of May 19, 2016.
Figure 20: Z spread history – belly
Figure 22: Z spread history – long end
Figure 19: Z spread vs. USDBRL
Figure 21: Sov spread history – belly
Figure 23: Sov spread history – long end
Page 15
20 May 2016
Figure 24: Petrobras 1Q16 summary financials (BRLm)
Petroleo Brasileiro SA
In com e State m e n t (R$ m m )
1 Q1 5
qoq
yoy
T otal Re v e n u e s
7 4 ,3 5 3 .0
7 9 ,9 4 3 .0
8 2 ,2 3 9 .0
8 5 ,1 0 3 .0
7 0 ,3 3 7 .0
-17.4%
-5.4%
COGS
G ross Profi t
(51,943.0)
2 2 ,4 1 0 .0
(54,381.0)
2 5 ,5 6 2 .0
(58,484.0)
2 3 ,7 5 5 .0
(58,254.0)
2 6 ,8 4 9 .0
(49,329.0)
2 1 ,0 0 8 .0
-15.3%
-5.0%
-21.8%
-6.3%
Gross Margin
2 Q1 5
3 Q1 5
4 Q1 5
1 Q1 6
2014
3 3 7 ,2 6 0 .0
(256,823.0)
8 0 ,4 3 7 .0
2015
3 2 1 ,6 3 8 .0
(223,062.0)
9 8 ,5 7 6 .0
LTM
3 1 7 ,6 2 2 .0
(220,448.0)
9 7 ,1 7 4 .0
30.1%
32.0%
28.9%
31.5%
29.9%
(168.1)
(27.2)
23.9%
30.6%
30.6%
Gross interest expense
(4,864.0)
(6,463.0)
(4,868.0)
(9,650.0)
(7,221.0)
-25.2%
48.5%
(16,211.0)
(25,845.0)
(28,202.0)
SG&A
Cash F l ow (R$ m m )
(4,434.0)
1 Q1 5
(6,650.0)
2 Q1 5
(6,609.0)
3 Q1 5
(9,231.0)
4 Q1 5
(6,403.0)
1 Q1 6
-30.6%
44.4%
(27,197.0)
2014
(26,924.0)
2015
(28,893.0)
LTM
Re porte d EBIT DA
qoq
yoy
23.6%
-2.0%
5 9 ,1 4 0 .0
7 3 ,8 5 9 .0
30.0%
993.5
104.5
17.5%
23.0%
23.1%
4 0 5 .0
NM
-7 9 .8 %
(2 ,3 5 4 .0 )
1 ,1 0 3 .0
(4 9 2 .0 )
(1 1 ,3 3 6 .0 )
26.0%
53.4%
(1 3 ,9 4 1 .0 )
(2 3 ,4 5 3 .0 )
(2 7 ,3 9 8 .0 )
(15,593.0)
-25.1%
-12.6%
(87,140.0)
(76,315.0)
(71,549.0)
NM
-63.1%
(250.0)
243.0
2 1 ,5 1 8 .0
1 9 ,7 7 1 .0
1 5 ,5 0 6 .0
1 7 ,0 6 4 .0
2 1 ,0 9 1 .0
28.9%
24.7%
18.9%
20.1%
2 ,0 0 0 .0
1 ,5 4 0 .0
(2 ,1 4 1 .0 )
(2 9 6 .0 )
N e t In te re st pai d
(7 ,3 9 1 .0 )
(2 ,9 1 4 .0 )
(4 ,1 4 9 .0 )
(8 ,9 9 9 .0 )
Net capex
(17,843.0)
(17,153.0)
(17,977.0)
(20,826.0)
(190.0)
(72.0)
146.0
Reported EBITDA Margin
Ch an ge i n W C
Acquisitions
396.0
Cash dividends paid
109.0
(7.0)
-
-
-
-
-
NM
NM
(8,735.0)
1 Q1 5
2 Q1 5
3 Q1 5
4 Q1 5
1 Q1 6
qoq
yoy
2014
2015
LTM
39,721.0
360,918.0
44,655.0
370,894.0
53,376.0
453,208.0
57,382.0
435,467.0
62,126.0
387,889.0
8.3%
56.4%
31,565.0
319,470.0
57,382.0
435,467.0
62,126.0
387,889.0
T otal De bt
Adjusted Cash and Cash equivalents
4 0 0 ,6 3 9 .0
68,182.0
4 1 5 ,5 4 9 .0
91,636.0
5 0 6 ,5 8 4 .0
104,236.0
4 9 2 ,8 4 9 .0
100,887.0
4 5 0 ,0 1 5 .0
80,521.0
3 5 1 ,0 3 5 .0
68,946.0
4 9 2 ,8 4 9 .0
100,887.0
4 5 0 ,0 1 5 .0
80,521.0
Adj u ste d N e t De bt
Cre di t Rati os
3 3 2 ,4 5 7 .0
1 Q1 5
3 2 3 ,9 1 3 .0
2 Q1 5
4 0 2 ,3 4 8 .0
3 Q1 5
3 9 1 ,9 6 2 .0
4 Q1 5
3 6 9 ,4 9 4 .0
1 Q1 6
-5.7%
11.1%
qoq bps
yoy bps
2 8 2 ,0 8 9 .0
2014
3 9 1 ,9 6 2 .0
2015
3 6 9 ,4 9 4 .0
LTM
S-T Debt/Tot Debt
9.9%
10.7%
10.5%
11.6%
13.8%
216.2
389.1
9.0%
11.6%
13.8%
Cash/S-T Debt
Total debt/LTM Reported EBITDA (x)
1.72x
6.04x
2.05x
5.95x
1.95x
6.59x
1.76x
6.67x
1.30x
6.13x
-46.2
-42.0
-54.5
8.6
2.18x
5.94x
1.76x
6.67x
1.30x
6.13x
Adjusted Net debt/LTM Reported EBITDA (x)
LTM Rec OCF/Total Debt (%)
5.01x
17.8%
4.64x
17.8%
5.24x
15.0%
5.31x
14.8%
5.03x
16.4%
-27.5
1.8
166.5
-137.2
4.77x
17.5%
5.31x
14.8%
5.03x
24.2%
Working Capital turnover (days)
CAPEX (%) Revenues
32
24.0%
32
21.5%
31
21.9%
29
24.5%
35
22.2%
6
2
-230.3
-182.9
27
25.8%
30
23.7%
31
22.5%
Bal an ce Sh e e t (R$ m m )
S-T Debt
L-T Debt
Capi tal Stru ctu re 1 Q1 6 (R$ m m )
L i qu i di ty
amount
Bonds
Banks
134,569.7
315,445.3
T otal De bt
Shareholders' Equity
4 5 0 ,0 1 5 .0
262,666.0
T otal Capi tal i zati on
7 1 2 ,6 8 1 .0
18.9%
44.3%
6 3 .1 %
36.9%
1 0 0 .0 %
2015
50,267
44,787
2016
2017
2018
T otal
80,521.0
8 0 ,5 2 1 .0
S-T Debt
Su rpl u s/(De fi ci t)
62,126.0
1 8 ,3 9 5 .0
Market Cap. As on 5/17/2016
Adjusted Net Debt
En te rpri se Val u e
89,260
EV/LTM EBITDA
2019
12.3%
-20.2%
18.1%
Pe trobras 1 Q1 6 re v e n u e bre akdow n
Equ i ty Val u e
241,024
17,405
7.5%
-8.7%
-
as % total
De bt m atu ri ty profi l e , R$ m n as of 1 Q1 6
63,639
-10.9%
-
7 3 ,4 3 2 .0
144,820.2
369,494.0
5 1 4 ,3 1 4 .2
7.00x
Distrib.
25%
E&P
21%
Gas & Power
& BioFuel
8%
Supply
46%
2020+
*Adjusted numbers add government securities with maturities of +90 days to cash
Source: Deutsche Bank, Company Data.
Page 16
20 May 2016
Figure 25: Petrobras 4Q15 summary financials (USDm)
Petroleo Brasileiro SA
In com e State m e n t (U SD m )
1 Q1 5
T otal Re v e n u e s
2 5 ,8 8 3 .5
COGS
G ross Profi t
2 Q1 5
3 Q1 5
2 6 ,0 3 9 .2
2 3 ,2 5 2 .4
4 Q1 5
2 2 ,1 3 5 .1
1 Q1 6
1 8 ,0 3 9 .8
qoq
yoy
-18.5%
-30.3%
2014
1 4 3 ,1 9 8 .0
2015
LTM
9 6 ,3 4 5 .0
8 9 ,4 6 6 .5
(62,052.4)
2 7 ,4 1 4 .1
(18,082.2)
7 ,8 0 1 .3
(17,713.1)
8 ,3 2 6 .1
(16,535.9)
6 ,7 1 6 .5
(15,151.8)
6 ,9 8 3 .4
(12,651.7)
5 ,3 8 8 .0
-16.5%
-30.0%
-22.8%
-30.9%
(109,045.1)
3 4 ,1 5 2 .9
(66,817.0)
2 9 ,5 2 7 .9
30.1%
32.0%
28.9%
31.5%
29.9%
(168.1)
(27.2)
23.9%
30.6%
30.6%
Gross interest expense
(1,693.2)
(2,105.1)
(1,376.4)
(2,509.9)
(1,852.0)
-26.2%
9.4%
(6,883.1)
(7,741.7)
(7,843.5)
SG&A
Cash F l ow (U SD m )
(1,543.5)
1 Q1 5
(2,166.1)
2 Q1 5
(1,868.6)
3 Q1 5
(2,401.0)
4 Q1 5
(1,642.2)
1 Q1 6
-31.6%
6.4%
qoq
yoy
(11,547.6)
2014
(8,064.9)
2015
(8,077.9)
LTM
Gross Margin
Re porte d EBIT D A
7 ,4 9 0 .8
6 ,4 3 9 .9
4 ,3 8 4 .2
4 ,4 3 8 .3
5 ,4 0 9 .3
21.9%
-27.8%
2 5 ,1 1 0 .4
2 2 ,1 2 4 .1
28.9%
24.7%
18.9%
20.1%
30.0%
993.5
104.5
17.5%
23.0%
23.1%
Ch an ge i n W C
(1 ,0 9 4 .3 )
8 4 7 .0
(2 ,5 5 8 .3 )
(9 7 .8 )
8 0 7 .1
NM
NM
(2 ,2 0 6 .3 )
(2 ,9 0 3 .3 )
(1 ,0 0 1 .9 )
N e t In te re st pai d
N e t cape x
(2 ,5 7 2 .9 )
(6 ,2 1 1 .4 )
(1 ,1 7 3 .1 )
(5 ,0 8 2 .8 )
(2 ,3 4 0 .6 )
(5 ,4 1 6 .8 )
(5 ,9 1 9 .2 )
(3 6 ,9 9 9 .0 )
(7 ,0 2 5 .2 )
(2 2 ,8 5 9 .8 )
(7 ,3 7 0 .3 )
(2 0 ,0 8 6 .0 )
Reported EBITDA Margin
Acquisitions
137.9
(9 4 9 .2 )
(5 ,5 8 7 .1 )
-72.8%
(106.1)
NM
NM
(3,708.8)
4 Q1 5
14,487.5
1 Q1 6
17,294.7
qoq
yoy
19.4%
40.6%
2014
11,877.3
111,742.8
119,527.6
114,808.9
109,944.2
107,980.9
-1.8%
-3.4%
120,210.0
109,944.2
107,980.9
T otal D e bt
1 2 4 ,0 4 0 .7
21,109.6
1 3 3 ,9 1 8 .5
29,531.4
1 2 8 ,3 3 0 .3
26,405.6
1 2 4 ,4 3 1 .7
25,471.4
1 2 5 ,2 7 5 .6
22,415.5
0.7%
1.0%
1 3 2 ,0 8 7 .2
25,943.0
1 2 4 ,4 3 1 .7
25,471.4
1 2 5 ,2 7 5 .6
22,415.5
Adj u ste d N e t D e bt
Cre di t Rati os
1 0 2 ,9 3 1 .1
1 Q1 5
1 0 4 ,3 8 7 .0
2 Q1 5
1 0 1 ,9 2 4 .8
3 Q1 5
9 8 ,9 6 0 .3
4 Q1 5
1 0 2 ,8 6 0 .1
1 Q1 6
1 0 6 ,1 4 4 .3
2014
9 8 ,9 6 0 .3
2015
1 0 2 ,8 6 0 .1
LTM
9.9%
1.72x
10.7%
2.05x
10.5%
1.95x
11.6%
1.76x
13.8%
1.30x
9.0%
2.18x
11.6%
1.76x
13.8%
1.30x
L-T Debt
S-T Debt/Tot Debt
Cash/S-T Debt
Total debt/LTM Reported EBITDA (x)
-
-
37.4
NM
3 Q1 5
13,521.5
-
(18.7)
13.0%
-35.6%
2 Q1 5
14,390.9
-
Bal an ce Sh e e t (U SD m )
S-T Debt
(53.7)
24.2%
-26.2%
1 Q1 5
12,297.9
Cash dividends paid
35.5
(2 ,9 0 7 .4 )
(3 ,9 9 9 .2 )
-
-12.0%
6.2%
3.9%
-0.1%
qoq bps
yoy bps
216.2
389.1
-46.2
-42.0
72.8
2 0 ,6 7 1 .7
2015
14,487.5
0.5
LTM
17,294.7
4.70x
5.24x
4.90x
5.47x
6.06x
59.1
135.9
5.26x
5.62x
6.06x
Adjusted Net debt/LTM Reported EBITDA (x)
LTM Rec OCF/Total Debt (%)
3.90x
26.0%
4.09x
23.4%
3.89x
23.4%
4.35x
20.6%
4.98x
17.3%
19.6
95.6
-331.8
-866.1
4.23x
20.7%
4.47x
20.1%
4.98x
26.5%
Working Capital turnover (days)
CAPEX (%) Revenues
32
24.0%
31
21.5%
32
21.9%
28
24.5%
36
22.2%
8.1
4.1
-230.3
-182.9
24
25.8%
25
23.7%
30
22.5%
Capi tal Stru ctu re 1 Q1 6 (U SD m )
L i qu i di ty
amount
Bonds
Banks
37,461.6
87,814.0
T otal D e bt
Shareholders' Equity
1 2 5 ,2 7 5 .6
73,121.2
T otal Capi tal i zati on
1 9 8 ,3 9 6 .8
as % total
18.9%
44.3%
6 3 .1 %
36.9%
1 0 0 .0 %
D e bt m atu ri ty profi l e , U SD m as of 1 Q1 6
2015
12,734
11,346
16,121
2016
2017
2018
T otal
S-T Debt
Su rpl u s/(D e fi ci t)
22,415.5
2 2 ,4 1 5 .5
17,294.7
5 ,1 2 0 .8
En te rpri se Val u e
22,612
2019
Market Cap. As on 5/17/2016
Adjusted Net Debt
EV/LTM EBITDA
Distrib.
23%
E&P
26%
Gas & Power
& BioFuel
8%
Equ i ty Val u e
61,057
4,409
Pe trobras 1 Q1 6 re v e n u e bre akdow n
41,453.0
102,860.1
1 4 4 ,3 1 3 .1
6.98x
Supply
43%
2020+
*Adjusted numbers add government securities with maturities of +90 days to cash
Source: Deutsche Bank, Company Data.
Page 17
20 May 2016
Page 18
20 May 2016
Appendix 1
Important Disclosures
Additional information available upon request
Disclosure checklist
Institution
Disclosure
Petrobras
Petroleo Brasileiro S.A. 5.625% 2043
1,8,14,15
1,8,14,15
1,8,14,15
1,8,14,15
1,8,14,15
1,8,14,15
Petroleo Brasileiro S.A. 3% 2019
1,8,14,15
1,8,14,15
1,8,14,15
1,8,14,15
1,8,14,15
1,8,14,15
PETBRA 8.375% '21
1,8,14,15
1,8,14,15
PETBRA 8.750% '26
1,8,14,15
1,8,14,15
1,8,14,15
*Prices are current as of the end of the previous trading session unless otherwise indicated and are sourced from local exchanges via Reuters, Bloomberg and other vendors . Other
information is sourced from Deutsche Bank, subject companies, and other sources. For disclosures pertaining to recommendations or estimates made on securities other than the
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20 May 2016
Important Disclosures Required by Non-U.S. Regulators
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The views expressed in this report accurately reflect the personal views of the undersigned lead analyst(s) about the
subject issuer and the securities of the issuer. In addition, the undersigned lead analyst(s) has not and will not receive
any compensation for providing a specific recommendation or view in this report. Eduardo Vieira
Deutsche Bank debt rating key
Buy: These bonds are expected to outperform other
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Hold: These bonds are fairly valued currently. If
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Sell: There exists a significant likelihood that these
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Bond rating dispersion and banking relationships
6
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63 %100 %
4
100 %
38 %
3
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0%
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Buy
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Companies Covered
Sell
Cos. w/ Banking Relationship
Global Universe
(a) Regulatory Disclosures
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20 May 2016
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Page 23
David Folkerts-Landau
Chief Economist and Global Head of Research
Raj Hindocha
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Research
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Petroleo Brasileiro S.A.

Transcription

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