Moody's lifts Petrobras outlook to positive

Tuesday, April 11, 2017

Moody's Investors Service has upgraded the outlook for Brazil's state-run oil company Petrobras to positive from stable, citing lower liquidity risk and the prospect of declining debt leverage.

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Petrobras' senior unsecured debt and corporate family ratings were lifted to 'B1' from 'B2' and the baseline credit assessment (BCA) rose to 'B2' from 'B3', Moody's said in a release on Monday.

"The actions on Petrobras' ratings, BCA and outlook reflect Moody's expectation of continued improvement in the company's liquidity profile and financial metrics over the next 12 months, which reduces Petrobras' credit risk," Moody's said.

The agency added that cost cuts, improved operating discipline, a stronger local currency and a more flexible fuel pricing policy have improved the company's financial position and maintained access to capital markets.

Petrobras has been battered by a multibillion-dollar corruption scandal, a prolonged oil price slump and Brazil's worst ever recession.

Last month, the Rio de Janeiro-based firm announced a fourth-quarter profit of 2.51bn reais (US$810mn), compared with a 36.9bn-real loss in the year-ago period.

It also raised its five-year investment forecast by around US$400mn, vowing to prioritize oil and gas production from deepwater fields.