(Bloomberg) -- Petroleo Brasileiro SA’s tumble to a 12-year low put the Ibovespa on pace for a second week of losses.
The state-controlled oil producer extended a three-day slide to 11 percent after Standard & Poor’s cut its credit rating to junk, adding to speculation the company will struggle to shore up its balance sheet. The downgrade should raise debt costs and reduce potential valuations on possible asset sales, according to Bank of America Corp. Petrobras, as the company is known, also followed a slump in crude after Goldman Sachs Group Inc. predicted a global supply glut could send the commodity to $20 a barrel.
Petrobras’s Chief Executive Officer Aldemir Bendine is seeking to contain damage from a decade of alleged kickbacks with plans to sell $15.1 billion in assets by the end of next year. The world’s most-indebted oil company is joining producers from Chevron Corp. to ENI SpA in trying to raise cash and cut operating costs amid a rout in oil.
“Petrobras downgrade made the situation even worse, hindering the outlook for the company’s recovery plan,” Paulo Henrique Amantea, an analyst at brokerage H.H. Picchioni, said from Belo Horizonte. “That adds up to the already very bad scenario for Brazilian stocks.”
The Ibovespa fell 0.2 percent to 46,420.41 at 11:55 a.m. in Sao Paulo, extending its weekly decline. Petrobras’s $2.5 billion in bonds due 2024 declined to the lowest level since they were first issued in March 2014. The real dropped 1 percent to 3.8870 per dollar.
To contact the reporter on this story: Denyse Godoy in Sao Paulo at email@example.com To contact the editors responsible for this story: Brendan Walsh at firstname.lastname@example.org Rita Nazareth.
Copyright 2017 Bloomberg News.
WHAT DO YOU THINK?
Click on the button below to add a comment.
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
Most Popular Articles