Petroleo Brasileiro Petrobras SA has seen its credit ratings to fall as it faces allegations regarding corruption and bribery.
The oil giant continues to take serious blows as they are fighting numerous allegations regarding bribery and corruption. They are accused of creating a bribery schemes by increasing the price of their public contracts and using over-payments as a tool to bribe the government officials.
A federal investigation initiated in March 2014, which has interrogated more than a few executives together with two former executives at Petrobas got arrested. Since the investigation started, Brazil’s biggest oil company shares performance was not up to the mark. From September 2014, Petrobas market cap has been contracted by almost 70%.
Petrobras (NYSE:PBR) was thriving last year as its stock price was trading as high as $20.65. However, the stock nosedived as the allegations regarding its corruption discouraged investors. Another de-motivating factor came in form of its delayed third quarter results. Furthermore, this delayed third quarter results increased speculation regarding their debt-servicing requirement.
The coil company succeeded in discussing terms with its shareholders, and got the time till 31st January to announce its quarter covering from October to December 2014 results. The quarterly earnings were posted on 28th January 3 days prior to its due date. However, the write-down amount was missing from the results. As per the estimation write-down amount varies from $4 to $22 billion and was a big concern regarding the asset value of the oil producers.
Petrobas’ fourth quarter earnings did not managed to provide the information, which investors were in search of for months. Moody’s demoted Petrobas unsecured debt rating to Baa3 from Baa2-which is the least investment grade. The credit rating agency also demoted company’s baseline to Ba2 from Ba1.
The credit rating agency also said that the lowered credit rating is under evaluation and can be further downgraded. Moody’s has shared its concerns regarding the company’s capability to extract funds from the international debt markets, as its position is under scrutiny due to ongoing federal investigation.
Not only Moody’s downgraded Petrobas credit rating. Standard & Poor also downgraded its credit rating to BBB-, while Fitch has given it BBB rating.
Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR)stock quote is down by 0.60%, with stock price $6.68 at after-hour trading on Friday, with 30-days mean volume of 43.40 million shares. The Brazilian oil giant company has a 52-week low of $5.79, and a 52-week high of $20.94, with market cap of $43.36 billion and price to earnings ratio of 6.18.