Bradesco’s Clemente Says Brazil Economy Nearing Turning Point/Release of delayed Petrobras earnings expected to clear up uncertainty

Bradesco’s Clemente Says Brazil Economy Nearing Turning Point

Release of delayed Petrobras earnings expected to clear up uncertainty

By

ROGERIO JELMAYER And JEFFREY T. LEWIS/WSJ

April 8, 2015 11:59 a.m. ET

SÃO PAULO—Brazil’s sluggish economy is nearing a turning point with the approaching release of the 2014 earnings results of Petroleo Brasileiro SA, or Petrobras, the head ofBradesco investment banking unit said Wednesday.

State-controlled oil company Petrobras has delayed announcing its results for the fourth quarter of 2014, and audited earnings for the third quarter, as the firm tries to calculate the cost of a corruption scandal involving its suppliers and contractors, among them the country’s biggest construction companies.

Executives of many builders have been arrested as part of the continuing investigation, and the scandal has slowed economic growth amid uncertainty about the outcome of the probe.

“The corporate crisis appears to already be dissipating and we see a turning point approaching,” said Sergio Clemente, vice president of Bradesco and head of its investment banking unit, Bradesco BBI.

The construction sector should see a wave of takeovers and mergers as a result of the Petrobras scandal, with the stronger companies coming out the winners, Mr. Clemente said.

Petrobras, which hasn’t released audited financial results since August, said in a filing last month it was working to “disclose as quickly as possible such financial statements.”

Petrobras has said it plans to sell off assets worth about $13.7 billion to cut its huge debt, and Bradesco and the oil company are in talks about the bank’s role in advising Petrobras on the process, Mr. Clemente said.

Petroleum giant Royal Dutch Shell PLC said earlier Wednesday it agreed to buy BG GroupPLC for about $70 billion, in a deal that would create the world’s largest independent producer of liquefied natural gas amid a historic downturn in energy prices.

If the new company has to sell assets to get regulatory approval for the purchase, it won’t get in the way of Petrobras’s asset sales, because they aren’t the same kind of assets, Mr. Clemente said.

The depreciation of the Brazilian currency against the dollar this year, which has seen the real go from 2.85 to the dollar at the end of February to 3.30 in mid-March, should also attract foreign investors to now-cheaper Brazilian assets, Mr. Clemente said. The real was trading at 3.09 to the dollar on Wednesday morning.

Write to Rogerio Jelmayer at rogerio.jelmayer@wsj.com and Jeffrey T. Lewis atjeffrey.lewis@wsj.com