The freefall in the prices of Petroleo Brasileiro Petrobras SA (ADR)(NYSE:PBR) has resulted into record lows in the bond trading of the company. It happened after an unexpected investigation in regard with bribing took place at the company. The news may not be as good for PBR investors, as it’s for Oppenheimer & Co. investors, who can make a handsome profit, if they can endure the volatility.
What’s the current status:
As of now, the $3.5 billion worth of notes of PBR, which are due by 2023 are offering 2.8% additional yield over the Brazilian sovereign debt. If compared the yield provided by both the instruments, one can easily understand that Petroleo Brasileiro Petrobras SA (ADR)(NYSE:PBR) notes are offering more than two times yield as compared to 2013 when they were issued.
As per the statement given by Omar Zeolla of Oppenheimer, PBR is the largest oil producer in the deep waters. The local government is ready to support the company through financial aid, which will help it running operations until it starts borrowing funds from international market once again. Currently, PBR is unable to do so because of the bribing investigation.
PBR has delayed the financial results announcement for the third quarter for the second time, in order to analyze the effects of the corruption probe on its builders, who bribed the executives of Petroleo Brasileiro Petrobras SA (ADR)(NYSE:PBR). The company is worried about the after-effects of this probe, which will haunt it in the near future.
Market experts claim that the current situation won’t last long. According to Omar Zeolla, Analyst, Oppenheimer, once things start falling in place a little bit, the situation will improve. It’s a matter of time and nothing else. Reporters tried to get in touch with the Presidency of Brazil, but they couldn’t do so as the presidency refused to comment on this issue.