Petrobras debt: myths and truths
Pedro Parente, president of Petrobras, stated in an interview on 04.12.2016 that corruption destroyed the company. He used this narrative to justify asset sales, claiming a structural financial crisis. However, the debt increase was largely due to currency devaluation (from 1.56 US$/R$ in Q1 2011 to 3.97 US$/R$ in Q3 2015) since 80% of debt is in foreign currency. Investments in pre-salt and refining also contributed. The debt-to-EBITDA ratio rose from 2.5 in Q2 2012 to 5.3 in Q4 2015. The 2017-2021 Business Plan set a target of 2.5 by 2018, requiring $21 billion in asset sales and 25% investment cuts. Parente admitted the accelerated target was his personal decision. Critics argue that selling assets now, amid low oil prices, leads to value loss. A study suggests a 3.1 target by 2018 would avoid selling profitable assets. Alternatives include using foreign reserves, BNDES loans, hybrid instruments, or international bonds. Petrobras recently raised $4 billion internationally.
Key facts
- Pedro Parente claimed corruption destroyed Petrobras in an interview on 04.12.2016.
- 80% of Petrobras debt is denominated in foreign currency, mainly dollars.
- Debt-to-EBITDA ratio rose from 2.5 in Q2 2012 to 5.3 in Q4 2015.
- The 2017-2021 PNG targets: reduce debt/EBITDA to 2.5 by 2018, sell $21 billion in assets, cut investments by 25%.
- Parente stated the accelerated 2.5 target by 2018 was his personal decision.
- A study indicates a 3.1 target by 2018 would avoid selling profitable assets.
- Alternatives include using foreign reserves, BNDES loans, hybrid instruments, or international bonds.
- Petrobras recently raised $4 billion in international markets.
Entities
Institutions
- Petrobras
- Correio Braziliense
- BNDES
- Federação Única dos Petroleiros
- UFRJ
Locations
- Brazil