EFTA01380759.pdf

7 October 2015 Corporate Credit,Energy Petroleo Brasileiro S.A. The average yield of the bonds due beyond 2019 is currently around 10%, compared to an average yield of the bonds due between 2018 and 2019 of around 10.3%. The spread curve is actually inverted beyond 2020. 'Figure 3: Petrobras' spread curve is inverted beyond 2020 1050 - 950 .1 • 850 8 8 8 • S. 8 • Par equivalent * 0 0 750 • • 0 • • 650 550 0 8 • 450 Kraig Sore 350 250 150 1 SO 4- 442 •"S' e:fr‘ 9 9 9 et° el? et> et, it AP .0 .0 .0 4 01y °d' .,,. . Gr 14* A.14) 45'4 S • a‘424 41.-ther A. it,do% &mot Deaductv Sn Iron a odiatileetanideia as 0/Oaten& 2075 Because of Petrobras' high leverage (5.2x estimated for 2016 with Brent of USD50/bbl and USDBRL of 4.2), significant challenges to reduce its cash burn, large debt maturities (USD60bn due by 2019 and USD104bn due by 2024), and the company's ability and motivation to issue secured debt in a way to significantly subordinate its bonds, we don't think that yields under 11% and bond prices above 67 for bonds due beyond 2017 compensate for the risks in absence of timely and material show of support from the Brazilian government. ifigure 4: Par -equivalent Spread vs. Cumulative Debt Maturities (USDbnj 1000 950 • $ 3.019s• 4.87520s 900 * 3'LS 174 S.875 18s 7 nas • zu 3.517s 850 40s., AA, • 24s . 4).-• 800 23s 415 • 43s 700 10 20 30 40 50 60 70 80 90 100 110 120 130 Source Datateh ew Page 6 Deutsche Bank Securities Inc. CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0079288 CONFIDENTIAL SDNY_GM_00225472 EFTA01380759