Petrobras Suppliers Negotiate Chinese Credit Deal, Chamber Says

Petrobras Suppliers Negotiate Chinese Credit Deal, Chamber Says

By Peter Millard

6:04 PM BRT
April 6, 2015

A group of Petroleo Brasileiro SA suppliers is negotiating about $3.5 billion in loans from Chinese institutions as China expands support for Brazil’s oil industry, the Brazil-China Chamber of Commerce & Industry said.

About half of the more than 20 suppliers who have been banned from participating in new tenders with Petrobras are in talks with Chinese lenders, Charles Tang, who heads the chamber, said in a telephone interview Monday.

China Development Bank Corp., Export-Import Bank of China and China Export & Credit Insurance Corp. are among lenders negotiating the facilities, he said, declining to name prospective borrowers. The talks follow an April 1 announcement that CDB agreed to lend the same amount to Petrobras. The state-run producer’s shares rallied 4.9 percent that day.

“China thinks it is a good opportunity to invest in the country,” said Tang. “China believes Brazil and Petrobras’ problems are temporary and will be overcome. This excess of pessimism we see in the Western world you don’t see in China.”

Petrobras, the top deep-water crude producer, is at the center of Brazil’s biggest corruption scandal in which a group of contractors allegedly bribed company executives to win inflated contracts. The company could lose its investment-grade credit rating if it fails to complete offshore production equipment fast enough to accelerate output, according to Fitch Ratings. Moody’s cut Petrobras to junk in February.

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