TEXT-S&P rates Petrobras Global Finance notes 'BBB'
Sept 24 - Standard & Poor's Ratings Services assigned today its 'BBB' debt rating to Petrobras Global Finance BV's (PGF) senior unsecured notes. PGF is a wholly-owned finance subsidiary of Brazilian oil and gas company Petroleo Brasileiro S.A. - Petrobras. The notes are denominated in euros and sterling pounds and expected to be issued in three tranches due 2019, 2023, and 2029. The notes will benefit from unconditional guarantee from Petrobras. New debt totals EUR2.0 billion and GBP450 million, and we expect the company to use proceeds to partly finance its capital expenditures plan. Our 'BBB' corporate rating on Petrobras reflects our view that there is a "very high" likelihood that the government of the Federative Republic of Brazil would provide timely and sufficient extraordinary support to the company, if needed, in the event of financial distress. As a result, under our government-related entity criteria, our ratings on Petrobras are one notch above of the stand-alone credit profile (SACP), which we assess as 'bbb-'. The SACP, in turn, reflect our assessment of Petrobras' business risk profile as "satisfactory" due to its strong exploration and production activities and a dominant market position in all aspects of the Brazilian hydrocarbon industry. It also reflects the company's financial risk profile as "intermediate," benefiting from a strong operating cash-flow generation ability, adequate liquidity, and very strong access to the capital markets. These factors offset the company's relatively tight expected credit metrics for its financial risk profile and the expected negative free-operating cash-flow until 2015. RELATED CRITERIA AND RESEARCH -- Petroleo Brasileiro S.A. - Petrobras 'BBB' Ratings Affirmed; The Outlook Is Stable, Aug. 13, 2012 -- Revised Methodology For Oil And Natural Gas Price Assumptions, Nov. 16, 2011 -- Methodology And Assumptions: Liquidity Descriptors For Global Corporate Issuers, Sept. 28, 2011 -- Rating Government-Related Entities: Methodology And Assumptions, Dec. 9, 2010 -- Stand-Alone Credit Profiles: One Component Of A Rating, Oct. 1, 2010 -- Key Credit Factors: Business And Financial Risks In The Oil And Gas Exploration And Production Industry, Nov. 10, 2008 RATINGS LIST Petroleo Brasileiro S.A. - Petrobras Corporate credit rating BBB/Stable/-- Rating Assigned Petrobras Global Finance BV Senior unsecured notes BBB Complete ratings information is available to subscribers of RatingsDirect on the Global Credit Portal at www.globalcreditportal.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com. Use the Ratings search box located in the left column.
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