Moody’s said it has raised the rating of Brazil’s state-owned energy company Petrobras, citing lower liquidity risk and prospects of better operating performance in the medium term.
The ratings agency upped Petrobras’ rating one level to B2 and changed its outlook to stable from negative.
Moody’s said the change reflected improvements in the company’s liquidity profile and in the regulatory framework in Brazil, which have helped to reduce Petrobras’ credit risk. The company has also demonstrated increased autonomy setting fuel prices, Moody’s said.
“Certain external factors also helped the company achieve some of its cash generation and asset sale goals for the year, including a better market sentiment in Brazil, following the presidential impeachment process, and the resulting appreciation of the Brazilian real, which reduced the company’s costs, capital expenditures and debt leverage,” Moody’s said in a report published on Friday.
The world’s most indebted oil and gas company, Petrobras is reeling from a mammoth corruption scandal and weak oil prices that have seen its debt load balloon to $125bn. The company announced last month it was scaling back its investment plans between 2017 and 2021. It said it intends to sell a total of $15.6bn in assets by the end of the year and $19.5bn in 2017 to 2018. In its efforts to raise cash, Petrobras recently agreed to sell a 90% stake in a natural gas pipeline unit for $5.19bn to a consortium led by Canadian investor Brookfield.
Moody’s reiterated its description of Petrobras’ business plan for 2017-2021. “Moody’s believes that the plan’s execution is challenging because it indicates a reduction in reported net leverage to 2.5 times by the end of 2018 from 5.3 times in 2015 based on significant improvements in operating efficiencies and higher crude prices, which have been highly volatile in the last couple of years and could remain so given continued excess supply and weak demand,” Moody’s said.