Standard & Poor's Reviews Petrobras Rating

Petrobras announced that the rating agency Standard & Poor's Ratings Services, has today downgraded the currency debt rating of Petrobras and its wholly owned subsidiary PfiCo (Petrobras International Finance Co.) from BBB to BBB- with a stable outlook. The Company's investment grade rating is now the same of May 2008, when the last upgraded has occurred.

According S&P, the revision is a result of lower oil price assumptions for the next years and its negative impact on Petrobras free operating cash flow which combined with the Company investment program of US $174 billion for the period 2009-2013 may affect the credit metrics forecast.

Despite the higher expected leverage to fund the Company's investments, S&P expects Petrobras to maintain its satisfactory business position and growth prospects. The agency also expects that corporate governance practices will remain solid.

Although Petrobras has a sizable investment program, the Company emphasizes its commitment to keep its capital structure in a level compatible with the investment grade. The execution of the Plan will allow the Company to grow the oil and gas production, reaching 3.6 million boed and 5.7 million boed in 2013 and 2020, respectively.

Petrobras estimates that oil price assumptions of its Business Plan, similar of current oil prices trend, will result in a free cash flow after dividends payment of US $148.6 billion for 2009-2013 which combined with the funding of US $30 billion hired in 2009 will provide enough funds to finance its business plan. Also, each US $1 increase in the oil price assumption generates US $500 million extra cash flow. Additionally, Petrobras implemented a cost reduction program and expects a positive impact in its financing needs.

The current debt amortization schedule is compatible with the cash flow generation and the maturity of most part of the loans hired in 2009 is 10 year or longer, in line with the return of our projects.


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