Petrobras' Foreign Currency IDR Raised To 'BBB'

Fitch Ratings said it has upgraded the foreign currency issuer default rating (IDR) of Petroleo Brasileiro S.A. (Petrobras) and its wholly owned subsidiary, Petrobras International Finance Company (PIFCO), to 'BBB' from 'BBB-'.

The actions reflect Petrobras' improving operating and financial performance and further strengthening of the macroeconomic and fiscal policy framework of its controlling shareholder, the Federative Republic of Brazil, the rating agency said.

PIFCO is unconditionally guaranteed by Petrobras.

Fitch also upgraded the local currency IDR to 'BBB+' from 'BBB' for Petrobras and affirmed the national long-term rating at 'AAA(bra)'. The outlook for all IDRs is stable.

Petrobras' ratings are supported by significant proven hydrocarbon reserves, increasing production, a favourable international product price environment, and successful corporate and industry restructuring. During the past decade, Petrobras has made a transition to more transparent financial standards, and a dominant domestic market share, Fitch said.


These factors are tempered by vulnerability to fluctuations in international commodity prices, exposure to local political interference, currency risk, domestic market revenue concentration and significant medium-term capital-investment requirements linked to the company's ambitious strategic plan, Fitch said.