Oil & Gas sector kept at 'market weight' by UOB as Sete Brasil’s financial lifeline comes together

SINGAPORE (June 19): Both Keppel Corp and SembMarine (SMM) are reportedly joining a queue to pony up some $300 to $350 million in working capital, to help finance the capital expenditure of their Brazilian customer Sete Brasil.

From the perspective of UOB KayHian, this outlay is still deemed “manageable”, given Keppel and SembMarine’s gearing of 0.41 times and 0.29 times respectively, as of end 1Q15. The broker is maintaining its “market weight” on the beleaguered O&G sector for now.

Shareholders of Sete Brasil, the debt-laden oil rig supplier facing default, are putting together a US$5 billion financing plan, with contribution coming from stake banks Banco de Brasil SA and Caixa Econômica Federal; private sector banks Itaú Unibanco Holdings, Banco Bradesco, and Banco Santander Brasil.

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