(BFW) Brazil Rating Seen Affected If Petrobras Cut Further: Canepa

(BFW) Brazil Rating Seen Affected If Petrobras Cut Further: Canepa


By Denyse Godoy

(Bloomberg) — Ibovespa futures declined as Moody’s Investors Service reduced the credit rating of state-controlled Petroleo Brasileiro SA to junk amid a corruption probe.

Contracts due in April slumped 1.2 percent to 52,000 at 9:25 a.m. in Sao Paulo. Moody’s kept a negative outlook on the producer known as Petrobras after cutting it to Ba2, two levels below investment grade, on Tuesday. The company’s ADRs declined 6.7 percent in early trading in New York.

“Even though Petrobras’s problems have been unfolding for three or four months, the size of the cut and the indication that further reductions could happen were surprising,”

Alexandre Povoa, who helps oversee $100 million at Canepa Asset Management, said by phone from Rio de Janeiro. “That’s the most important Brazilian company, and the downgrade should affect the mood of international and local investors regarding the country’s assets.”

Petrobras accounts for about 8 percent of the benchmark stock index’s weighting.

Meatpacker JBS SA may move after Reuters reported the company will halt eight units because of a truckers’ strike.

Phone carrier Telefonica Brasil SA may be active as fourth- quarter profit exceeded analysts’ estimates.

The Ibovespa entered a bear market Dec. 12 after falling 22 percent from last year’s high in September. Trading volume of equities in Sao Paulo was 5.9 billion reais ($2.1 billion) Tuesday, according to the exchange. That compares with a daily average of 6.7 billion reais this year.

(Bloomberg) — If Moody’s cuts Petrobras’s rating further, as it signaled, and govt needs to capitalize co., Brazil’s sovereign rating may be reduced, Alexandre Povoa, asset manager at Canepa, said in phone interview from Rio de Janeiro.

* “With the current downgrade, co. will have more

difficulties in getting finance, and a capitalization from

the govt would put in risk the fiscal adjustments it has to

make”

* Brazilian govt has been failing in improve co.’s management

and operations as it took too long to appoint new CEO amid

the corruption probe and Aldemir Bendine didn’t have a big

positive impact

* NOTE: Moody’s cut Petrobras credit rating to Ba2, two levels

below investment grade w/ negative outlook, citing concern

about corruption probe, liquidity

* NOTE: Petrobras Rating Cut Raises Chance of Equity Issuance

This Yr: UBS

* NOTE: Brazil Said Concerned Petrobras Downgrade Threatens

Sovereign Rating: Folha Link