Petrobras chief executive Maria das Gracas Foster told Brazil?s Finance Minister Guido Mantega in a meeting that without higher fuel prices in the country, the company?s debt would rise well above its internal target, Reuter quoted a report from the Estado de Sao Paulo newspaper on Saturday.
According to an anonymous source cited by the paper, Gracas Foster told the minister, who also chairs the Petrobras board, last week that debt could reach 3.5 times earnings before interest, taxes, depreciation and amortisation (EBITDA) by the fourth quarter of this year.
Petrobras did not immediately respond to phone calls made by Reuters or an emailed request for confirmation.
According to the news wire, the company?s debt had already risen to 2.77 times EBITDA, which is above its internal limit of 2.5 times core profit.
Moody's Investors Service had put Petrobras debt on watch for a possible downgrade on 18 December.
A credit rating below investment grade would oblige international funds to abandon Petrobras when Gra?as Foster has promised to find savings of more than $15 billion to prevent a $237 billion five-year investment plan from ballooning.
Petrobras cash generation has been squeezed in recent years as the government, which owns a majority of voting shares, prevented the company from raising fuel prices in line with world prices. The government has held prices in check to help limit inflation.
Mantega ruled out higher fuel prices for the time being since the government raised prices on 30 January.
Source: http://www.upstreamonline.com/live/article1316758.ece
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