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Moody's downgrades Petrobras credit rating because of corruption scandal

Saturday, January 31st 2015 - 10:44 UTC
Full article 40 comments
The rating “reflected concerns about corruption investigations and liquidity pressures that might result from delays in delivering audited financial statements.” The rating “reflected concerns about corruption investigations and liquidity pressures that might result from delays in delivering audited financial statements.”
Petrobras CEO Maria das Gracas Foster announced that the company will “restrict exploration activities to the necessary minimum” Petrobras CEO Maria das Gracas Foster announced that the company will “restrict exploration activities to the necessary minimum”

Moody's Investors Service has downgraded the credit rating of Brazil's state-owned oil company Petrobras because of the widening kickback-corruption scandal affecting the country's largest corporation.The credit rating agency announced its decision late Thursday in a statement posted on its website.

It said the downgrade of Petrobras “reflected concerns about corruption investigations and liquidity pressures that might result from delays in delivering audited financial statements.”

“The ratings remain on review for further downgrade” Moody's said.

Authorities allege that firms bribed former Petrobras executives to win inflated contracts worth as much as 4 billion dollars, and that some of that money was then funneled back to the ruling Workers' Party campaign coffers and those of its allies.

The scheme is among Brazil's biggest corruption scandals ever.

Prosecutors have said that the scheme involved at least 800 million in bribes and other illegal funds. They expect that figure to grow as they keep investigating.

The prosecutors say they've recovered about 170 million, that over 230 businesses of all sizes are being investigated and that 86 people so far are facing charges.

Earlier this week, Petrobras released its third quarter report for 2014, showing that profits dropped 9% compared to the same period in 2013.

Third quarter profits totaled 3.1 billion Reais (1.2 billion), down 38% from those posted in the second quarter of 2014.

The company said Thursday that it will reduce its investments this year because of its current financial situation and losses resulting from the corruption scheme. Petrobras' chief executive, Maria das Gracas Foster said the company will “restrict exploration activities to the necessary minimum.”

In 2015, investments will amount to 42 billion, 25% reduction and by year's end. Petrobras will sell off 3 billion worth of assets, almost equal to its 3.5 billion disinvestment in 2014.
 

Top Comments

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  • yankeeboy

    These hoodlums may get away with their corruptions in Brazil but not in the USA. Dilma can whine all she wants but there's going to be a lot of high level Brazilians that will have to stay in SoAm for the rest of their lives or end up in a nice cozy USA jail.
    I think we are seeing the end of PBR as a public company.

    Watch Brazil blow though their reserves the next few years
    and their largest city go without water for days on end

    I think its hilarious.
    The only country left standing is India...told ya. They will survive and grow, why you ask? Because they speak English.

    Jan 31st, 2015 - 01:46 pm 0
  • Brasileiro

    That's cool! This Proves that no one cares about NoAm.

    Jan 31st, 2015 - 02:53 pm 0
  • yankeeboy

    How so? How's the water in San Paulo? I hear its on only 2 days a week in most of the city.
    That must make people smell nice
    Maybe you're crazy because you're drinking polluted water...

    Jan 31st, 2015 - 03:12 pm 0
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