Ratings agency Standard & Poor’s has stuck the boot in while Petrobras is down, handing the troubled Brazilian state oil firm a serious downgrade on Thursday, Bloomberg reports.
The downgrade, a drop of two levels to BB, came a day after the San Francisco agency downgraded Brazil the country’s sovereign debt to junk status.
Petrobras is the world’s most indebted oil company and has been suffering a crisis of market confidence as the corruption scandal engulfing it worsens.
That bribes-for-rigged-contracts scandal has reached the high and mighty with corporate executives and politicians being called in and prosecuted by the authorities.
On Monday it saw two members of the government’s Cabinet placed under investigation. And national president Dilma Rousseff, a former Petrobras chairwoman, looks ever more insecure as her popularity wanes.
On top of the scandal Petrobras has been hurt by the global drop-off in the oil price and it has been hamstrung by mandates that it must participate in projects in the subsalt polygon.
Petrobras was already in austerity mode with asset-selling, many job layoffs and drastically reduced budgets.
Now with this downgrade it will find it harder to raise debt and will see some institutional investors legally bound to divest.
S&P follows Moody’s – another of the big three rating agencies – which had already rated Petrobras debt as junk back in February.