S&P: Petrobras Energia on watch positive

Standard & Poor's said it placed its B- foreign currency long-term corporate credit rating and senior unsecured debt rating on Petrobras Energia SA on CreditWatch positive.

S&P said the rating action follows the analysis of Petroleos Brasileiros' announcement to consolidate most of its Argentine operations under Petrobras Energia.

S&P said the most significant credit impact comes from the increasing economic incentives in light of the existence of cross-default clauses between Petrobras and Petrobras Energia that will broaden the latter's financial flexibility.

The ratings on Petrobras Energia reflect its relatively aggressive financial profile, significant need for capital expenditures, high exposure to the Republic of Argentina's uncertain and rapidly changing economic and regulatory rules and the uncertainties surrounding the utility business in which the company participates, according to S&P.

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