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Petroleo Brasileiro SA Petrobras (ADR) (NYSE: PBR) shares are down on Thursday 1.7 percent to $4.91 in early market trading. The shares' fall follows Moody's downgrade of all ratings for the company to Ba3 from Ba2. There have been current political disturbances happening in Brazil, and Petrobras has been a subject of corruption investigation.
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Investors are questioning if Petrobras might be under pressure to sell its "crown jewels" following the downgrade. According to Moody's, economic activity indicators continue to sharply deteriorate with no clear sign of when they will bottom out.
The Crown Jewels
Petrobras currently holds up to a 10 percent stake in the Libra concession for sale. If the sale is successful, the company's stake in Libra will minimally require 30 percent. Libra had been licensed back in November 2013 to a consortium. This consortium is comprised of "Petrobras (10 percent), Shell (20 percent), Total (20 percent), CNPC (10 percent) and CNOOC (10 percent)", according to Petrobras. It was the country's first and only licensing round that was held under the new PSC system.
Petrobras now targets $58 billion worth in disposals; however, its success-to-date has been disappointing for investors. Its so-called "crown jewels" – the planned IPO of its distribution unit that was for sale – have been cancelled.
The sale of Petrobras's Argentina assets also had failed. There was even a planned $506 million disposal of its 49 percent stake in Gaspetro, which is currently facing legal problems following its December 2 ruling in Bahia.
For investors, this may not be the wisest time for the company to sell the stake following its 38 percent decline in the oil price over the past 12 months. Petrobras list of potential buyers is not that extensive. Its valuation upside is still limited by weak industry and commodity funded constraints.
Image Credit: By Junius (Own work) [Public domain], via Wikimedia Commons
Crypto Whales Are Loading Up — Are You?
New research shows the biggest crypto buyers are back. And this time? They could hold for the possibility that Bitcoin will surpass $100,000 in 2024. You don’t want to miss the next massive crypto bull run like we saw in 2020 and 2021. To know exactly what’s going on and what to buy… Get Access To Benzinga’s Best Crypto Research and Investments For Only $1.