S&P rates Petrobras notes BBB-

Standard & Poor's said it assigned a BBB- senior unsecured debt rating to the $1 billion global notes due March 2019 of Petrobras International Finance Co., a wholly owned subsidiary of Petroleo Brasileiro SA (BBB-/stable).

Proceeds will be used to extend the company's debt amortization profile as it replaces shorter existing debt instruments.

The rating on the notes is aligned with that on Petrobras, considering the unconditional corporate guarantee provided by Petrobras, the agency said.

The standalone rating also reflects the company's satisfactory business risk profile, characterized by the quality of its exploration-and-production activities and a dominant market position in all aspects of the Brazilian hydrocarbon industry, the agency noted.

The strengths are somewhat balanced by Petrobras's aggressive capital expenditures program for the 2009 to 2013 period, leading the company to post negative free operating cash flow and increase debt in the next years, and limited geographic diversification, S&P said.

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