Petroleo Brasileiro Petrobras SA (ADR) is presently facing inquiry over charges of corruption. Federal Prosecuting attorney Claim that the company exaggerated its contracts cost along with the leading construction companies and the remaining was used to bribe politicians and past company officials. The company announced its unaudited reports on Tuesday January 27th but did not include the actual value of the asset.
The company has been incapable to increase its finances in order to fund its activities, due to its corruption scandal. As stated by Fitch Ratings, the government of Brazil is expected to help the company, if it was not able to finance itself through the medium of debt market as reported by Bloomberg.
Last week Petrobras credit rating has been demoted by Moody's. The downgrade was underneath of what is needed for the company for an investment rating. This was because of the restrictions being imposed on Petrobras. The company will further witness a downgrade if the condition does not get better. Standard and Poor's and Fitch is also planning to downgrade its rating on Petrobras stock.
Latin America Managing director for corporate finance of Fitch Ratings, Mr. Joe Bormann said, if the Brazilian government interferes, the funding can be raised through a government bank like Brazilian development bank (BNDES). He further added if Petrobras received this support, Fitch's lowermost BBB- investment rating was correct.
Petrobras has a level of debt amounting to nearly $135 billion and at the moment it is the biggest indebted energy company all over the world as it has issued $52 billion worth of bonds. If the company did not announce audited financial statement till the end of April, it has to make repayment of the bonds.
Petrobras officials who did not have anything since it got stuck into the situation created by corruption scandal cheered the news of government interference.as stated by local Newspaper in Brazil, on Thursday Petrobras said it received approximately $2.1 billion funding from the government owned banks. This news reached newspaper from an unknown official of Petrobras.
On Friday, company's bond worth of $2.25 billion maturing in the year 2024 witness an increase by $1.20. This assistance by the Brazilian government will help the company to maintain its liquidity during the period of decreasing crude oil prices and corruption scandal.
During the pre-market trading on Friday, Petroleo Brasileiro Petrobras SA (ADR) was trading at $6.63 after its stock went green by 0.90%