Petrobras’s stock is worthless and a growing group of investors believe Brazil’s state-controlled oil company will convert debt into equity in a move that will benefit bondholders over shareholders, BTG Pactual said in a research report.
Brazil’s three state-controlled banks, Banco do Brasil, Caixa Economica and development bank BNDES, hold an estimated 87 billion reais ($22 billion) in Petrobras debt, and it’s a “genuine possibility” that these securities will eventually get converted into equity and dilute the value of existing shares, BTG analysts led by Antonio Junqueira said in a note to clients dated Feb 15.
Research Report
Brazil Energy Insight 
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