Brazilian state-run oil company Petrobras’ debt was downgraded to junk status on Tuesday by Moody’s Investors Service.
The ratings agency wrote that the downgrade reflects “increasing concern about corruption investigations” and also Petrobras’ liquidity and debt burden, which is about US$100 billion.
It is the latest sign of the quick fall from grace of Petrobras, which not long ago was seen as an industry darling prepared to lead development of Brazil’s recent finds of massive offshore oil basins that could hold upward of 100 billion barrels.
However, since last year, the company has been engulfed in an ever-sprawling corruption scandal — a kickback scheme that prosecutors say is the largest ever uncovered in Brazil.
Prosecutors allege that Brazil’s biggest construction and oil firms paid big bribes to former Petrobras officials and politicians in return for inflated contracts.
“The company has repeatedly fallen short of certain financial and production targets and Moody’s no longer expects significant improvement in leverage over the medium term,” the report read.
Moody’s added that Petrobras is on watch for further downgrade, in large part because the company has continued to delay the release of audited third-quarter financial statements, which are meant to include writedowns on how much the company lost to kickbacks.
Further delay in releasing the audited financial statements “carries the risk that creditors could take actions that lead to a declaration of technical default.”
It is a huge blow for Brazil’s biggest company and the entire Brazilian oil industry — which employs 400,000 and depends overwhelmingly on Petrobras and its investments in local development.
It is also more bad news for Brazil as a whole.
“The risk now grows for the Brazilian government,” economic commentator Miriam Leitao wrote on the Web site of the O Globo newspaper, adding that Brazil’s sovereign debt is clinging to the lowest investment-grade rating.
“As Petrobras is the biggest Brazilian company, the risks for Brazil and the firm are tied together. For that reason fears are rising that Brazil will also be downgraded,” she wrote.
Ryanair, Transavia, Volotea and other low-cost airlines are feeling the financial pain from high jet fuel prices as a result of the Middle East war and are cutting flights. The closure of the Strait of Hormuz has taken a huge chunk of oil supplies off the market, sending the price of jet fuel soaring and triggering fears of shortages that could force airlines to cancel flights. Airlines are not waiting for a lack of supplies to react. “Travel alert: Airlines are cutting thousands of flights right now,” Travel Therapy host Karen Schaler said in an Instagram reel this past weekend.
MANAGING RISKS: Taiwan has secured LNG sufficient to cover 95 percent of electricity demand for next month, UBS said, describing the government’s approach as proactive UBS Group AG has raised its forecast for Taiwan’s economic growth this year to 8 percent, up from 6.9 percent previously, and said expansion could reach as high as 8.6 percent if external energy shocks are avoided. The upgrade reflects a stronger-than-expected first-quarter performance and sustained momentum in artificial intelligence (AI)-driven exports, which UBS said are providing a firm foundation for growth despite geopolitical and energy risks. Taiwan’s GDP expanded 13.69 percent year-on-year in the first quarter, the fastest growth since the second quarter of 1987, the Directorate-General of Budget, Accounting and Statistics (DGBAS) reported on Thursday. On a seasonally
The list of Asian stocks that benefit from business partnership with Nvidia Corp is getting longer, as the region further integrates into the artificial intelligence (AI) chip giant’s business ecosystem. Just in the past week, South Korea’s LG Electronics Inc, Taiwan’s Nanya Technology Corp (南亞科技), as well as China’s Huizhou Desay SV Automotive Co (德賽西威) and Pateo Connect Technology Shanghai Corp (博泰車聯) have become the latest to rally on news of tie-ups, supply-chain participation or product collaboration with the US chip designer. Asian suppliers account for about 90 percent of Nvidia’s production costs, up from about 65 percent last year, data compiled
The Fair Trade Commission’s (FTC) ongoing review of Grab Holdings Ltd’s US$600 million acquisition of Foodpanda Taiwan’s operations, announced on March 23, has taken on fresh urgency as industry experts warn that the transaction could embed significant Chinese cybersecurity vulnerabilities into Taiwan’s digital infrastructure through Grab’s deep ties to autonomous-driving firm WeRide (文遠知行). Less than 16 months after the FTC blocked Uber Eats’ direct attempt to acquire Foodpanda Taiwan — citing potential combined market shares of 80 to 90 percent — the emergence of Grab as the buyer has prompted questions about whether the same competitive harm is simply being rerouted
RSS