Petroleo Brasileiro SA (Petrobras). Photo: Dado Galdieri/Bloomberg

Cleary Gottlieb Steen & Hamilton is leading Brazilian state oil company Petróleo Brasileiro S.A. (Petrobras) through a $20 billion abbreviated five-day debt exchange and related tender – the New York-based law firm's second gargantuan deal this month in Latin America.

The Petrobras offerings, which close and settle on Wednesday, come on the heels of $10 billion in liability management transactions that Cleary advised on last week for another big state oil firm, Mexico's Petróleos Mexicanos (Pemex).

Shearman & Sterling advised the underwriters on both the Petrobras and the Pemex deals.

Cleary partner Jorge Juantorena, who worked the Pemex deal, said the simultaneous transactions called for some serious hustle within the firm.

"To execute both these transactions in the same week required us to mobilise expertise in multiple areas – liability management, oil and gas, debt capital markets, disclosure – at scale and in three languages," he said.

The Petrobras exchange and tender offers launched simultaneously on September 9, just two days before the Mexican government announced a cash injection and debt tender for Pemex. The transactions used similar techniques: a combination of five-day, fixed-spread cash tender offers in coordination with exchange offers for new, longer-dated securities.

"The liability management business is becoming increasingly sophisticated, with tailored transaction designs that allow fast transactions and efficient pricing," said Cleary partner David Lopez, who worked both the Petrobras and Pemex deals.

Both oil firms have leaned heavily on debt to finance operations. Petrobras, though, has fared better in the eyes of the ratings agencies. Fitch raised the Brazilian company's standalone credit profile by two notches in March, noting "robust cash generation" and significant debt reduction. The ratings agency also applauded Petrobras for reporting capital structure improvement during the past few years.

Pemex, meanwhile, has been under threat of credit downgrades. Since the oil firm is a quasi-sovereign, its debt carries an implicit guarantee from the Mexican government. Cleary partner Nicolas Grabar advises the Mexican Finance Ministry on Pemex matters.

The Petrobras offer targeted seven series of outstanding notes. Cleary also advised Petrobras in a concurrent new money offering of one series of U.S.-dollar denominated global notes issued in the exchange offer. The exchange and related tender targeted $20 billion of notes.

Petrobras is one of the world's largest integrated oil and gas companies, engaged in a broad range of activities. Cleary has represented Petrobras for many years in significant regulatory reporting, corporate governance, financing and litigation matters.

"We have been working with Petrobras for nearly two decades, and the management of the debt profile is constantly more sophisticated and more nimble," said Cleary partner Francesca Odell, who advised on the Petrobras transaction.

Abbreviated offerings are key to this nimbleness. Traditional exchange offers must be open for 20 business days, whereas abbreviated exchange offers are only required to be open for five business days.

This shorter deal window minimises an issuer's exposure to market volatility.

The U.S. Securities and Exchange Commission (SEC) first sanctioned abbreviated exchange offers in 2015, at the behest of law firms.

Cleary joined a group of law firms that requested a no-action letter several years ago from the SEC to clarify the conditions in which abbreviated exchange offers – like the ones deployed for Pemex and Petrobras – are permitted.