S&P affirms Petrobas

Standard & Poor's said it affirmed the BBB- and stable outlook ratings on Petróleo Brasileiro SA (Petrobras) following news that the company, in conjunction with Ultrapar Participações SA (BB+ with stable outlook) and Braskem SA (BB with stable outlook), have jointly acquired control of Grupo Ipiranga , a large Brazilian company with operations in fuel distribution, petrochemicals, oil refinery and natural gas distribution.

Petrobras' total debt adjusted by pension fund liabilities was about $22 billion at Dec. 31.

The outlook is stable.

The total value of transaction is estimated at $4 billion, out of which about $1.3 billion will be assumed by Petrobras. S&P said it believes the proposed transaction will have marginal effect both on Petrobras' credit metrics and business profile because of the relatively small magnitude of the deal compared with the size of Petrobras' operations and in light of the company's already significant capital budget committed for the next five years.

Nevertheless, Petrobras will further strengthen its market leadership in fuel distribution in the Northern, Northeastern and Midwestern regions of Brazil, the agency said, but added that the transaction will generate only negligible gains for Petrobras' refining operations.

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