Petrobras forecast the impact to its current five-year budget will be an upward adjustment of just 3%, but some of the company’s shareholders and EWZ investors have reason to be concerned. Just 13 months ago, the company sold $11 billion in bonds in what was, at the time, the largest corporate bond sale by an emerging markets firm.
In the first quarter, Petrobras sold $8.5 billion in debt. The company, which accounts for over 11% of EWZ’s weight, “accounts for 40 percent of debt sold by Latin American governments or companies this year, compared with 9 percent in 2013,” Bloomberg reported.
Making it difficult to rule out a dilutive share offering as a means of paying for access to the Buzious field is Petrobras’ history of mega secondary offerings. In 2010, the company commenced a $70 billion secondary offering in what is still the largest share sale by a company traded on a major U.S. exchange. In the year following that share sale, EWZ slumped 15.3%. [Petrobras Pushes Brazil ETF Lower]
iShares MSCI Brazil Capped ETF
