Moody's lowers Petrobras notes

Moody's Investors Service said it downgraded to A3 from A2 the rating of Petrobras International Finance Co.'s 9¾% senior notes due 2011 that benefit from political risk insurance coverage.

The downgrade follows the downgrade of Petrobras' global local-currency rating to A3. The agency said the rating on the notes is based on the ability and willingness of Petrobras to make payments in Brazilian reais to investors for conversion into dollars under the terms of the transaction documents and the availability of 18 months of outside credit enhancement available to make interest payments during the period of an inconvertibility or transferability event.

According to Moody's, the A3 rating also takes into account the ability and willingness of the provider of political risk insurance protection, Steadfast Insurance Co., to make payment under its respective commitments.

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