Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR.A) took hit from multiple negative events. As the oil slump is adding to the concerns for the oil and gas company, it received another shock after Brazil nixed its bond plan. The Brazilian government official has confirmed that they are withdrawing support for the company’s proposed local bond in a bid to avoid rating cut.
Finance Minister Joaquim Levy has dismissed the possibility of guaranteeing $2.9 billion bond owed to Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR.A). Levy’s decision now signals that the state-run company has to rely on its own tools to raise funds as it has already been kept off from overseas credit markets ever since graft-related losses showed up in its financial results. According to an oil and gas analyst, Cassia Inez Silva Pontes at Lopes Filho Consultoria de Investimentos SA, the approach of Levy is very different for both economy and Petrobras as compared to the earlier finance minister.
Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR.A) felt the rating pinch last month after Moody assigned it junk rating while it tagged Brazil with a negative outlook. Also, the possibility of more economic contraction and opposition to President Dilma Rousseff’s measures to trim budget deficit are adding to the concern that the country may face more rating downgrade. Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR.A) credibility is limited, and it looks to an ever-expanding need of funds to maintain its vast offshore oilfields.
Adding to the woes of the company was Cowen, which revised the price target on Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR.A) downward from $11 to $9. The analysts’ project several pitfalls laid up ahead as the outcome of the corruption probe that plagued the company remains pending. The stock of the company fell 5.16% to $5.33 yesterday amid the series of such negative development.