On Tuesday analysts at Moody’s agency downgraded the stock ratings of Brazilian oil company Petrobras further. The fourth time downgrading of the company since October last year, has resulted in the scandal-plagued oil giant’s share to fell6% on Wednesday.
Petroleo Brasileiro Petrobras SA (NYSE:PBR) shares decreased 8% on the BM&F Bovespa, stock exchange at Sao Paulo, before recovering back again to 5.95% during afternoon trading hours.
The plunge in stocks for the oil giant came due to the downgrading announcement by Moody’s for the state-controlled firm, due to increasing concern of the politically charged scandal also delayed in delivering audit results and high debt due to sliding crude oil prices.
Dilma Rousseff, the President of the left-wing Workers’ Party, which got caught up in the scandal, commented that “lack of direct knowledge about what is happening at Petrobras,” on the event of downgrading the company’s shares.
She further told to journalists that, “I have no doubt Petrobras will be a company with great capacity to recover.”
Petrobras has been considered as on the Brazil’s most prestigious businesses in the world’s seventh-largest economy country, until recently. The state itself controls about 48% of the business. But after Moody’s dropping its unsecured debt rating of the oil giant from Baa3 to Ba2, will be two steps away into the junk territory for it. Moreover, Moody has warned the company that it will still be kept under strong speculations and considerations for downgrade over time.
“These rating actions reflect increasing concern about corruption investigations and liquidity pressures that might result from delays in delivering audited financial statements, as well as Moody’s expectation that the company will be challenged to make meaningful reduction in its very high debt burden over the next several years,” said in a statement.
The company is currently going through allegations that claim that corrupt executives along with other construction companies to have inflated contracts for over decade to adjust $4billion. Out of which, channeling some of the cash to politicians, including members of Rousseff’s ruling coalition.
This came across as pretty damaging for Rousseff, who has managed the company’s board form from 2003 to 2010.
The chief executive and the entire board of directors of the company resigned earlier this month, its CEO Aldemir Bendine, who is found to be close to the Worker’s Party, has still failed to diminish fears of the investors and stake holders.
The company also has lost $9 billion in stock value due to the release of an unaudited version of results which was released without the account of losses due to corruption.