Petroleo Brasileiro SA, the world’s most indebted oil producer, is bolstering ties to China as a corruption scandal has shut the company out of international bond markets.

Petrobras, as Brazil’s state-run producer is known, signed a finance contract with the China Development Bank for $3.5 billion, the first part of an accord to be implemented this year and in 2016, according to a regulatory filing Wednesday. That follows the entrance of two Chinese oil companies in Petrobras’s biggest project in 2013 and a $10 billion cash-for-oil agreement in 2009.

Petrobras is slashing investments, selling assets and seeking financing options as it searches for ways to book corruption losses in financial statements. Delays in reporting earnings have all but shut out the company from bond markets at a time of slumping crude prices.

“The Chinese are seizing on their opportunities worldwide and the fact that Petrobras has another funding option is very positive,” Marcelo Lima, a fixed-income trading manager at INTL FCStone Securities Inc. in Miami, said in an e-mail.

The deal with China, which Petrobras said would be followed by further agreements with the Asian nation, is the first major financial pact since the overhaul of Petrobras’s management in February and the arrival of Chief Executive Officer Aldemir Bendine.

Petrobras shares jumped 4.9% to 10.21 reais in Sao Paulo on Wednesday, the highest close since Jan. 22. The company’s $2.5 billion of notes due 2024 climbed 2.79 cents to 96.91 cents on the dollar, the biggest advance this year.

“Both parties confirmed their intention to work on further cooperation in the near future,” the Rio de Janeiro-based company said in the filing. “This contract is an important framework to continue the strategic partnership between China Development Bank and Petrobras.”

Brazil’s President Dilma Rousseff said Tuesday that Petrobras’ recovery would proceed by publishing a long-delayed audited financial statement by the end of April. In an exclusive interview in the presidential palace in Brasilia, Rousseff denied that she knew about the bribery scandal that has shaken the company she chaired from 2003 to 2010.

The China Development Bank contract was signed with Petrobras Global Trading BV during a trip to China by Ivan Monteiro, the company’s chief financial officer.

Wednesday’s announcement follows the purchase by PetroChina Co. and Cnooc Ltd., China’s biggest offshore explorer, of a 10% stake each in a consortium to explore the Libra oil field in the ultra-deep waters of Brazil’s Santos Basin.

In 2009, Petrobras signed a $10 billion loan with China Development Bank which included an export component for 150,000 b/d in the first year and 200,000 b/d over the nine subsequent years.

Source: Bloomberg