Fitch lifts Petrobras

Fitch Ratings said it upgraded the foreign-currency issuer default rating and senior unsecured notes of Petroleo Brasileiro SA (Petrobras) and wholly owned subsidiary Petrobras International Finance Co. to BBB from BBB-.

The agency also upgraded the local-currency issuer default rating to BBB+ from BBB for Petrobras and affirmed the national long-term rating at AAA(bra).

The outlook is stable.

According to Fitch, the upgrades reflect Petrobras' improving operating and financial performance as well as further strengthening of the macroeconomic and fiscal policy framework of its controlling shareholder, the Federative Republic of Brazil.

Ratings are supported by significant proven hydrocarbon reserves, increasing production, a favorable international product price environment and successful corporate and industry restructuring, the agency said.

Ratings are supported by a leadership position in the Brazilian domestic market and its strategic importance to Brazil, Fitch said.

At fiscal year-end 2007, the company's total debt-to-EBITDA ratio remained stable at 1.3 times, the agency noted.

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