Moody’s Revises Rating Maintaining Investment Grade

Source: www.gulfoilandgas.com 10/21/2014, Location: South America

Petrobras informs that the rating agency Moody's announced that the level of risk (rating) of debt in foreign currency and place of Petrobras Baa1 to Baa2 with perspective negative, while maintaining investment grade.

This review, according to Moody's, reflects the high financial leverage and the expectation of a significant decline from the same agency only occurs after 2016, contrary to the original expectations of the agency.

Moody's view 's, even though Petrobras has been relatively successful in implementing its investment program and its production targets, the increase in debt as a result of the devaluation of the real losses in the downstream segment (Supply) related to the gap between international and domestic prices and the increasing need for funding, are factors that weigh in the evaluation.

According to the agency, the lower international oil prices, if maintained in the long term, may be beneficial for the downstream segment, but will negatively affect operations upstream (exploration and production). Regarding investment company, Moody's believes that, although there is a reduction in 2015, it should not be sufficient for accelerated debt reduction, in an environment of real depreciation. In this environment, according to the agency, the deleveraging occur at a slower pace than initially anticipated.

According to Moody's, the rating of Baa2 Petrobras is grounded by its large reserve base and dominance in the oil industry in Brazil, with a leadership position, significant discoveries in pre-salt, increasing production and technological expertise. Petrobras's rating also considers the extraordinary support from the Federal Government in a stress scenario.

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