Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR), which has taken the entire economy of Brazil in its corruption blot, got a little acquittal when Ratings Services of Standard & Poor maintained its credit rating. However, it is expected that the President of nation, Dilma Rousseff will experience bad news on March 27, 2015 after the economic growth report card is released.
Had S&P downgraded the credit rating of this company, it would have come to a status of “Junk.” This in turn would have led to increased borrowing costs. Meanwhile, it would have also meant a tarnished President’s image, which is keenly trying to improvise the Brazilian fiscal situation and restoring public faith in economic policy.
President’s Undercut Standing with the Voters
Dilma Rousseff was once again elected as the Brazilian president in October 2014. She has witnessed the plummeting approval rating after the state-run Petrobras corruption scandal came in the forefront.
In its conference call today, the analysts at S&P said that the scandal, which is said to be the largest in Brazilian history, is heavily taking its toll on the economy as well. Even though S&P has slashed the outlook for Petrobras, but it did not downgrade the credit rating. The plight of this company can be apprehended from the fact that the Investors Service in Moody’s Corporation (NYSE:MCO) downgraded the company to the status of junk.
The Investment Powerhouse Transitioning to Junk Status
It is absolutely bizarre that the company, which was traditionally the powerhouse of Brazilian economy, has been reduced to the status of junk now. Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR) was accredited as the investment thrust that was responsible for driving approximately 10% of the total yearly investment business of the country. However, the bribery and corruption sham of the company has pushed it to cut down its spending in this crucial arena as well.
According to S&P’s Latin America MD, Lisa Schineller, the story of this company is putting off the story of growth.