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Petrotrin issues Caribbean’s Largest Investment Grade bond deal

Executive Chairman Malcolm Jones addresses audience at the ceremonial close

On May 2, Petrotrin, the integrated oil and gas company wholly owned by the Government of the Republic of Trinidad and Tobago, issued its inaugural bond in the international capital markets. 

The US$750 million 15-year amortizing bond (which was settled on May 8, 2007) has a three-year moratorium on principal repayment. This is the largest investment grade bond deal ever issued in the Caribbean, and the second largest Caribbean bond issue ever.

The notes were rated Baa2 by Moody’s and BBB+ by Standard & Poor’s. The bond has a final maturity of 2022, and amortizes in 24 semi-annual equal payments starting in 2010, with an average life of 9.25 years. 

The coupon to be paid on the notes is 6.00% with an issue yield of 6.062%.  

In issuing the bond, Citigroup Global Markets Inc. acted as Petrotrin’s Sole Book-Running Manager, while Calyon Credit Agricole CIB was the Co-Manager. Mizuho Corporate Bank, Ltd was the financial advisor.

Proceeds from this bond will be used to finance a large portion of the US$800 million estimated capital expenditure on the refinery for the Gasoline Optimization Programme (GOP). 

The GOP, a key project aimed at improving the refinery’s ability to produce cleaner and more environmentally friendly transport fuels, involves the construction of an Alkylation Unit, Acid Unit, Prefractionation Unit, C5/ C6 Isomerisation Complex and the CCR Platforming Complex. The Fluid Catalytic Cracking Unit (FCCU) will also be upgraded and there would be additional Offsites and Utilities work.

From far left: Minister of Trade and Industry Mr. Kenneth Valley; Country Corporate Manager and MD Citi Bank, Mr. Dennis Evans, third from right; Minister in the Ministry of Finance, Mr. Conrad Enill and Regional Executive Caribbean and Central America Mr. Suresh Maharaj of Citi Bank.

In an address at the bond’s ceremonial close held at the Hilton Trinidad Hotel and Conference Centre, Executive Chairman Mr. Malcolm Jones described the bond as a landmark achievement for the Company, its business partners and the country. 

“This represents the largest investment grade bond deal ever issued in a single energy project in the Caribbean and the second largest Caribbean bond issue ever,” he said. “My Finance people have also assured me that the coupon and yield rates that we negotiated are a milestone for financing in Trinidad and Tobago and the region. Citi Trinidad and Tobago has provided a prime example of how the local Banking Community can leverage international financial resources to fully support the strategic initiatives of the energy sector.”

Mr. Jones indicated that Petrotrin, through its predecessor companies, had been in the oil and gas business for over 100 years and is continuing to consolidate its upstream portfolio and incorporate new and relevant technology into its operations, in its continued efforts to adapt to changing markets. The Company has also been able to participate successfully in new corporate and strategic joint ventures with the aim of increasing crude and gas production.

In addition to these are those initiatives, which are currently

underway in the refinery. These include the Journey to Excellence Programme, the Gasoline Optimization Programme and the construction of the diesel hydrotreating and dearomatization plant.

The success of these programs is crucial to the Company’s continued success.

“While all of our achievements and networks may sound excellent, we are well aware that the oil and gas business does not stand still,” Mr. Jones stated. “Petrotrin is at a critical crossroad where we must again make the needed investments for our survival and growth.”

The successful completion of the GOP is vital for a number of reasons. It will enable the Company to bring cleaner and more environmentally friendly transport fuels to regional and international markets. It will also enable the Company to honor all of its contractual commitments. Petrotrin anticipates that upon completion of the GOP, the Company will be well placed to be one of the best suppliers of quality, environmentally friendly gasolines in the region.

The GOP would also be configured in such a manner as to ensure that at least 30% local content would be maintained throughout the project since the work of local sub-contractors would be maximized at all stages.

Executive Chairman Malcolm Jones and Director and Corporate Bank Head Raymond Gatcliffe of Citi Bank exchange pleasantries.

Other benefits of the GOP include:

	An increase in finished gasoline yield of the refinery of approximately 40%. This is at the expense of unfinished gasoline and vacuum gas oil and purchased isobutanes.
	An improvement in the quality of the gasoline pool in terms of an increase in the Motor Octane Number and a reduction in the benzene and sulfur content.
	An overall improvement in the premium product yield and, at the same time, a decrease in intermediate refined product yield.
	Improved energy efficiency and environmental compliance.
	Economic maintenance of throughput at 168,000 bpd.

“Petrotrin is confident of our ability to prudently manage the proceeds of this bond issue in a way that would benefit all stakeholders,” Mr. Jones said. “Our extensive experience in the sector and our access to cutting edge technology; coupled with our flexibility and willingness to adapt to the changing global oil and gas business, are sure to benefit us well into the future. We will continue to improve our corporate performance on all fronts, even as we make the necessary investments to grow our business.”