Moody's: Petrobras unaffected on add-ons

Moody's Investors Service said the reopening of Petrobras Global Finance BV's 6 1/8% global notes due 2022, 7 3/8% global notes due 2027 and 7¼% global notes due 2044 has no effect on the existing B1 ratings on the notes.

The add-ons are to the existing set of notes and no new assignment is being made, Moody's explained.

Petrobras Global Finance's add-ons will be unconditionally guaranteed by Petroleo Brasileiro SA, so the B1 rating on the proposed notes is based on the rating of Petrobras.

The proposed notes are senior unsecured and pari passu with Petrobras Global Finance and the company's other senior foreign-currency debt, the agency said.

The proceeds will be used for debt refinancing and other general corporate purposes, Moody's said.

The outlook is positive.

The company's B2 baseline credit assessment, which indicates the company's standalone credit strength, considers its high financial leverage, low to negative free cash flow, high refinancing risk, local currency volatility risk and operating challenges in a difficult industry and economic environment, the agency said.

Free cash flow also will remain under pressure in the next couple of years due to low crude oil prices and low fuel demand in Brazil, Moody's said.

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