Fitch: Petrobras notes BBB

Fitch Ratings said it assigned a BBB rating to Petroleo Brasileiro SA's (Petrobras) proposed £700 million senior unsecured global notes due in 2026. The notes will be issued through Petrobras International Finance Co. and will be unconditionally and irrevocably guaranteed by Petrobras.

Proceeds will be used to fund Petrobras' capital expenditure program and for general corporate purposes.

Fitch said Petrobras' ratings are supported by its leadership position in the Brazilian domestic energy market, its recognized expertise in offshore exploration and production and its strategic importance to Brazil.

The ratings are tempered by Petrobras' exposure to local political interference and its significant medium-term capital-investment program, along with vulnerability to fluctuations in international commodity prices, currency risk, and domestic market revenue concentration.

Petrobras' growth strategy is considered aggressive and could prove challenging. Also, credit metrics are expected to deteriorate as a result of an incremental increase in leverage. Petrobras' ample liquidity, its proven access to the financial markets, and the expectation that credit metrics will recover once the company significantly monetizes its large oil reserve base somewhat mitigates these risks.

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