Petroleo Brasileiro Petrobras SA (NYSE:PBR), the state controlled oil company of Brazil, is facing the risk of being left out of the capital markets even as the corruption probe currently besetting the company reveals that it is deeply entrenched in a wide corruption scandal. Reuters reports that an early repayment of bonds amounting to $11 billion, as well as local loans amounting to $5.8 billion, will be the likely outcome if auditors fail to approve the company’s annual results by April next year. Auditors refused to sign third quarter results the previous month on grounds of Petrobras deliberately overpaying both assets and contractors.
Petroleo Brasileiro Petrobras SA (NYSE:PBR) is dependent on the international bond markets as its main source for funding, and analysts expect that global bond investors will naturally shy away from the company’s bond offering pending a clearly audited information, according to Reuters, citing reports from UBS Securities and Morgan Stanley & Co analysts. Reuters also cited an unnamed banker who helped oversee the company’s bond offerings in the past years as saying that any funding apart from international bond markets will not be enough for Petrobras.
Petroleo Brasileiro Petrobras SA (NYSE:PBR) is now facing a class action suit filed against it by U.S. plaintiffs in a New York court on December 8. The plaintiffs are asking for compensation on economic losses and damages. Petrobras is accused of bribery and manipulation of state contracts that lead to artificial inflation of share price, thereby affecting investor decisions.
This article has been written by Nonito Guntan.