| The Brazilian flag (Gaby Bra) |
Brazilian borrowers would have to pay a premium to issue now, meaning they are unlikely to do so, they said.
Moody’s, Standard & Poor’s and Fitch have slashed OAS’ ratings this week after the borrower missed an interest payment on its $400m 2021 bond due on January 2.
Fitch cut OAS’s rating seven notches, to C from B+, saying the company was facing difficulties in accessing credit lines as a result of the investigation into alleged corruption at Petrobras and that it had decided not to service its financial obligations in the short term in order to preserve liquidity.
The company will default if it does not make the payment within a 30-day grace period.
Petrobras’ announcement that it would release unaudited third quarter financial statements this month has cheered some investors. The company said in November it would postpone publication of the audited numbers because of an investigation into corruption allegations. “It is the right move to release the financial results sooner rather than later,” said a credit analyst.
Yet, the federal investigation continues, and uncertainty over how far it will spread — Petrobras last month released a list of 23 companies it was temporarily halting new contracts with — has made investors wary of Brazilian debt, said an investor.
High-grade credits should be able to price deals at relatively good prices further down the line, he said, but it will make more sense for them to wait.
OAS has reportedly said it is working in a restructuring plan that may call for the disposal of assets in order to raise funds. Those assets could include OAS’ stake in Invepar, said a source. LF