Petrobras vows belt-tightening, transparency after downgrade

GMT 19:33 2015 Thursday ,26 February

Arab Today, arab today Petrobras vows belt-tightening, transparency after downgrade

Brazil's Petrobras
Rio de Janeiro - AFP

Brazil's Petrobras promised belt-tightening and house-cleaning Thursday after Moody's rating agency this week downgraded the scandal-plagued oil giant for a fourth time in as many months.
Petrobras said that it also would release, "as soon as possible, transparent and reliable" verified 2014 earning results to restore investor confidence after repeated delays.
The state oil concern added that it "understands that it will be necessary to reduce its investments" as it cuts costs, and that it will have to "look into other options for financing and to increase cash flow."
In its statement, Petrobras added that the company is in the process of "working to improve its internal controls, as can be seen by the recent creation of our division on governance, risk and compliance."  
Petrobras, the largest company in the world's seventh-largest economy, once was considered one of Brazil's best and most prestigious businesses.
But Moody's on Tuesday dropped its unsecured debt rating from Baa3 to Ba2, two steps into junk territory, amid downward spiraling profits and a deepening corruption scandal.
Petrobras stock plunged Wednesday, one day after the downgrade.
Moody's cited concern over a politically charged kickbacks scandal currently engulfing the company, as well as continued delays in delivering audited earnings results.
The company is reeling from allegations that corrupt executives and construction companies for a decade inflated contracts to the tune of $4 billion, funneling some of the cash to politicians, including members of Rousseff's ruling coalition.
Petrobras also has been hurt by a high debt burden and sliding global oil prices.
In a statement, Moody's said the lowered ratings reflected "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."
President Dilma Rousseff, whose left-wing Workers' Party has been caught up in the scandal, downplayed the ratings cut, saying it showed a "lack of direct knowledge about what is happening at Petrobras."
"I have no doubt Petrobras will be a company with great capacity to recover," she told journalists.
The allegations have been highly damaging for Rousseff, who chaired the Petrobras board from 2003 to 2010, during much of the period under investigation.
The company's chief executive resigned earlier this month along with the entire board of directors, but its new CEO Aldemir Bendine -- a former bank executive who is seen as close to the Workers' Party -- has so far not succeeded in allaying market fears.

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