By some measures, Brazil’s state oil behemoth Petrobras is the world’s most-indebted company.
And managing that debt load—roughly $130 billion at the end of last year—has become increasingly tough. The weakness of both oil prices and Brazil’s currency makes foreign bond holders tougher to pay off. It also raises the price of the oil the company imports, refines, and sells to the domestic market. Oh, and then there’s the slow-moving corruption scandal that that forced the company to announce a $17 billion related write-down last month.
The result is that the company’s financial wiggle room is narrowing fast. The fact that Moody’s yanked the company’s investment grade reflects the market’s growing skepticism about the company. That skepticism will only make it tougher (read: more expensive) for Petrobras to pull off the financial feats of debt rollovers it will need to keep current on its debts.
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