Petrobras takes another government punch, Morgan Stanley downgrades

|About: Petrobras - Petroleo Brasil... (PBR)|By:, SA News Editor

It's not that the asset the Brazilian government is bestowing upon Petrobras (PBR +0.1%) is junk: Morgan Stanley analyst Bruno Montanari likes the geology, but thinks that "more barrels was the last thing Petrobras needed right now.”

The deal means more capex for a company that is already highly leveraged, so Montanari - who used to be a Petrobras bull - downgrades shares to Hold from Buy and cuts his price target to $16 from $17 previously.

Bloomberg reports PBR is now considering asset sales to help buffer the total ~15B reais ($6.7B) bill to the government, with some analysts worrying about the possibility of fire-sale prices.