Singapore-headquartered Yinson Production has sold US$1.17 billion of project bonds to refinance bank debt for a floating production, storage and offloading vessel ( FPSO ) operating offshore Brazil.

The 144A/Reg S senior secured notes from Yinson Bergenia Production BV are the world’s largest and longest-dated FPSO project bonds issued to date.

FPSOs are typically financed with bank debt during construction and deployment, but the cash flows from long-term lease deals with major oil companies make them attractive to bond market investors. The FPSO Maria Quiteria is operating under a 22.5-year lease-and-operate contract with Petrobras, in the offshore Jubarte field.  

The notes are fully amortizing with a final maturity of 19.6 years and were priced at a fixed coupon of 8.498%. The proceeds from the transaction will be used to refinance the existing outstanding debt related to the FPSO, fund reserve accounts as required under the new bond issue ( unless funded by letters of credit ), cover transaction-related fees and expenses, and for distribution to Yinson Production as a shareholder of the issuer.

Citigroup and J.P. Morgan acted as global coordinators for the offering. HSBC, ING, Santander and Standard Chartered Bank acted as joint bookrunners, and Bladex, MUFG, Natixis, Ramirez & Co, and Société Générale Corporate & Investment Banking acted as co-managers.

Clifford Chance was adviser to the initial purchasers. Norton Rose Fulbright acted as legal counsel to the bond issuer. It also advised the issuer in respect of a letter of credit ( LC ) facility to permit it to collateralize certain reserve accounts with secured LCs.

Moody’s and Fitch assigned credit ratings of Ba1 and BB+, respectively, to the notes, reflecting the strong credit fundamentals of FPSO Maria Quiteria and the strategic importance of the FPSO to Petrobras.

“The exceptionally high demand is a strong endorsement of our platform, our strategy, and the strength of the underlying project and reflects the investor community’s growing appetite for this asset class," says Yinson chief financial officer Markus Wenker. "With this bond issue, we further strengthen Yinson Production’s capital structure and create long-term value, while offering noteholders exposure to a high-quality asset with robust downside protections and an uncapped investment grade structure.”

The notes are listed on the London Stock Exchange’s International Securities Market.