UPDATE 1-Vale, Petrobras mull bond sales within weeks -source

Guillermo Parra-Bernal
Tuesday, 19 Nov 2013 | 3:54 PM ET

NEW YORK, Nov 19 (Reuters) - Vale SA and PetrĂ³leo Brasileiro SA, two of Brazil's three largest companies, are considering selling bonds in international debt markets before the end of this year or in early 2014, a source with 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 declined to be identified because the plans are private. The most likely timetable for a sale could be early January, when a window of opportunity usually opens for sales of high-grade, emerging market debt, the source added.

In the case of Petrobras a potential bond offering could come either in dollars, euros or British pounds, the source added. The company is gauging pursuing an offering before the year ends, if market conditions allow, or pushing it backwards until the next window of opportunity opens in early 2014, the source said.

The companies could try to raise money for 2014 investments and other corporate purposes earlier than usual to mitigate fundraising risk ahead of a presidential election in Brazil and the U.S. Federal Reserve's expected wind-down of years of monetary stimulus. Optimism that Petrobras could soon be allowed by the federal government to increase local gasoline prices could make the company "attractive again from a bondholder perspective," the source noted.

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

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

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

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