Fitch Solutions: Concern Mounts for Petrobras; CDS 89% Wider from 2012

  Fitch Solutions: Concern Mounts for Petrobras; CDS 89% Wider from 2012

Business Wire

NEW YORK -- August 20, 2013

Market concerns over Petroleo Brasileiro SA's (Petrobras) ability to carry out
its future investment plan has sent the company's credit default swaps (CDS)
to their widest levels in four years, according to Fitch Solutions.

Petrobras' CDS have widened 89% year over year. At 300 basis points, credit
protection on the oil company's debt is widening to levels not seen since
April 2009. The likely reason for worsening market sentiment is that Petrobas
may need to issue more debt to help finance its five-year investment plan
worth roughly $237 billion.

The CDS Implied Rating (CDS IR) for Petrobras moved one notch lower to 'BB+'
(two notches below its IDR), three months ago. If CDS continue trending at
current levels, the CDS IR is likely to move lower again. CDS liquidity for
Petrobras has increased substantially as well, moving up from trading in the
21st global percentile to the sixth. Higher CDS liquidity is another sign of
heightened market uncertainty over Petrobras' credit prospects.

Fitch Solutions, a division of the Fitch Group, focuses on the development of
fixed-income products and services, bringing to market a wide range of data,
analytical tools and related services. The division is also the distribution
channel for Fitch Ratings content.

Fitch Ratings and Fitch Solutions are part of the Fitch Group, a jointly-owned
subsidiary of Fimalac, S.A. and Hearst Corporation. For additional
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Fitch Ratings
Diana Allmendinger
Fitch Solutions, 33 Whitehall Street, New York, NY 10004
Media Relations
Sandro Scenga
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