Brazil’s state-run oil firm Petrobras signed a preliminary deal with the Chinese lender China Exim Bank for a $1b loan, before originally planned as its debt service costs surge in the coming years amid the worst oil market in a generation, Reuters reported. In fact, this operation to finance equipment and service contracts was bringing forward a loan that was previously scheduled for 2017, Petrobras said.
The oil producer, which has been mired in Brazil’s biggest corruption investigation known as Carwash, has been leaning more heavily on Chinese lenders recently at a time ratings downgrades, the rout in oil prices, and Brazil’s recession have led to higher borrowing costs in international debt markets.
For his side, China has invested in oil-rich nations to ensure supplies to the world’s second-biggest crude market after the US, and similar deals have helped Venezuela fund its ballooning debt. For instance, in February, Petrobras secured a $10b loan from China Development Bank Corp. that is part of a deal to supply crude to the Asian country.