Date
22 November 2017
Asset sales have become imperative for Petrobras after Moody's stripped the scandal-wracked company of its investment-grade rating. Photo: Bloomberg
Asset sales have become imperative for Petrobras after Moody's stripped the scandal-wracked company of its investment-grade rating. Photo: Bloomberg

Petrobras hires JPMorgan for US$3 bln asset sales

Petróleo Brasileiro SA (Petrobras) has hired JPMorgan Chase & Co. to handle asset sales worth US$3 billion this year, Reuters reported, citing sources with direct knowledge of the situation.

Properties and drilling licenses are among assets that could be put on the block.

Asset sales have become imperative for Petrobras after Moody’s Investors Service stripped the company of its investment-grade rating and warned that further cuts are possible, the news agency said.

Worries over a looming cash crunch and a corruption scandal were behind the downgrade, according to Moody’s.

Prosecutors have alleged that allies of President Dilma Rousseff used Petrobras to skim billions of reais through overpriced contracts in political campaign kickbacks for over a decade.

The scandal has cut Petrobras’ access to bond markets after independent auditors, concerned over the need for potential asset impairments, refused to sign off on the company’s quarterly earnings reports.

Chief executive Aldemir Bendine, who took office a month ago, has made investment cuts and asset divestitures the cornerstone of his plan to restore confidence in the company.

A reduction in the company’s five-year, US$221 billion capital spending plan is also widely expected.

Moody’s was the first of the three major rating firms to put Petrobras ratings on so-called junk status. Fitch Ratings and Standard and Poor’s currently rate Petrobras at the lowest investment-grade ranking.

JPMorgan will structure the sale and try to attract the largest number of bidders possible for the assets.

Potential bidders could include Middle East investors, mainly sovereign wealth funds familiar with oil and gas projects, the report said.

Petrobras sold US$10.7 billion worth of assets between October 2012 and December 2013, as part of a plan to exit non-core assets to fund its investment program.

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CG

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