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Petrobras announces that Moody’s rating agency has disclosed a revision of Petrobras’ global foreign and local currency debt ratings to Baa2 from Baa1 with a negative outlook, maintaining the Investment Grade.

This revision, according to Moody’s, reflects high financial leverage and the agency expectation that it is only likely to decline significantly after 2016, contrary to the original agency expectations.

In Moody’s point of view, while Petrobras has been relatively successful executing its investments programme and meeting production targets, the increase of indebtedness as a consequence of the Real depreciation, losses on downstream segment related to the gap between international and domestic prices and the increase of funding needs, are factors that influence the evaluation.

In addition, in accordance with the agency, the lowest international oil prices, if maintained at long term, could be beneficial to the downstream segment, but they will negatively affect upstream operations. Regarding the company’s investments, Moody’s believes that, even if it has a reduction in 2015, it would not be sufficient for an accelerate indebtedness reduction in a real depreciation environment. At this environment, according to the agency, the deleveraging would occur slower than initially anticipated.

According to Moody’s, Petrobras' Baa2 rating is supported by its large-scale reserve base and dominance in the Brazilian oil industry with a leading position, pre-salt significant discoveries, growing production and technological expertise. Petrobras’ rating also considers the extraordinary Federal Government support in a stressful scenario.

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